Shares of Cava (CAVA -14.80%) were taking a dive today after the fast-casual chain posted disappointing results in its second-quarter earnings report.
As of 10:35 a.m. ET, the stock is down 16.7% on the news.
Image source: Cava.
Cava's momentum slows
The chain has delivered mostly blockbuster results since its 2023 IPO, but Cava's growth significantly slowed in the second quarter as same-store sales rose just 2.1%. The weak comparable sales growth comes at a time when much of the restaurant industry is struggling, as discretionary spending has pulled back due to fears around trade tensions.
Overall revenue was up 20.3% to $278.2 million thanks to a steady flow of new restaurant openings, but that missed the consensus at $285.2 million.
Average unit volume improved from $2.7 million to $2.9 million, a positive sign for the overall growth in the business, and restaurant-level profit margin was strong at 26.3%, down slightly from 26.5% in the quarter a year ago.
On the bottom line, adjusted earnings per share improved from $0.14 to $0.16, which beat expectations at $0.13.
CEO Brett Schulman said, "During the second quarter of 2025, we continued to grow market share and firmly establish our category-defining leadership position."
What's next for Cava
Looking ahead, Cava also disappointed the market by cutting its guidance for the full year.
The company now sees same-store sales growth of 4%-6%, down from a previous range of 6%-8%. However, its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance remained the same at $152 million-$159 million.
Overall, the sell-off shouldn't be surprising due to the slowdown in sales and the guidance cut. However, the long-term outlook is still promising for Cava, as it expects to grow from around 400 restaurants currently to more than 1,000 by 2032. While the slowdown could last more than a quarter, it's not a reason for long-term investors to sell the stock.
