Shares of restaurant company Cava Group (CAVA 10.50%) hit new all-time highs on Tuesday after the company released financial results for the fourth quarter of 2023, showing strong growth and encouraging profits. As of 2:30 p.m. ET, Cava stock was up about 11%.
A great year for Cava
In 2023, Cava grew revenue by 60% compared to 2022, surpassing $700 million for the year. Moreover, the company was profitable with full-year net income of $13.3 million -- not bad for a small chain of only 309 locations that just went public in June.
Cava's financial results in 2023 were capped off with a strong fourth quarter that beat expectations. The company had Q4 same-store-sales growth of over 11%. For perspective, many other restaurant companies have struggled with dwindling restaurant traffic in recent months.
Q4 same-store-sales results were better than expected for Cava. Management admits that it's still temporarily benefiting from its headline-grabbing initial public offering (IPO). But regardless of the reason, it was a strong end to the year for Cava.
Coming down to earth in 2024
For 2024, Cava expects same-store-sales growth of 3% to 5%. That's quite the slowdown compared to full-year growth of 18% in 2023. Nevertheless, it's a strong number considering how much sales have increased in the past couple of years.
What Cava lacks in same-store-sales growth, it will make up for with new restaurant openings. It expects to open between 48 and 52 new locations in 2024, which would be about a 16% increase to its current restaurant count.
In 2024, Cava also expects a restaurant-level operating profit margin of about 23%, down from its almost 25% margin in 2023.
In summary, Cava's growth was sensational in 2023, but things will slow down in 2024. Financial results should still be great for this up-and-coming restaurant company. But it will be interesting to see how the market reacts to good but slower results from Cava.
