Back in January, when Cava Group (CAVA +1.29%) shares were trading in the mid-$60s and the sentiment was firmly "broken restaurant stock," I made the case that the bears were missing the forest for the trees. The unit economics of new locations were exceptional, margins were holding, and the path to 1,000 stores was credible. Fast-forward to today -- the stock price is up roughly 41% year to date, recently trading near $82.
So now what? The Cava thesis hasn't changed. It's just been validated.
When Cava reported fourth-quarter 2025 earnings in late February, shares surged more than 25% in a single session. The company crossed $1 billion in annual revenue for the first time, posting full-year revenue growth of 22.5%. Same-restaurant sales rose 0.5% in Q4, beating Wall Street's expectation of a 0.1% decline. CEO Brett Schulman called it "a record-setting year." It's hard to argue with that.
Perhaps most importantly, the demographic softness I flagged in January -- younger diners pulling back -- reversed. CFO Tricia Tolivar confirmed stabilization among that customer cohort and noted improvement across income groups, age groups, and regions. The K-shaped economy, it turns out, isn't insurmountable when your product delivers real perceived value.
Image source: Getty Images.
CNBC stock analyst Jim Cramer even touched on Cava in a recent Mad Money recap, where he shared his insights on the stock. When a caller asked for his take, Cramer said he has always liked Cava, noting, "I think that Cava is great. I never understood why it was all the way down."
Now comes the real test for Cava
With the foundation validated, Cava is leaning hard into growth. Management guided for 74 to 76 net new restaurant openings in 2026, alongside 3% to 5% same-restaurant sales growth and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $176 million to $184 million.
Cava now has 439 locations across 29 states -- and it's actively filling in the map. New openings are appearing in suburban markets. The question investors should be asking is whether this pace of expansion holds up in a market still rattled by tariff uncertainty, labor cost inflation, and cautious consumers. My answer: Yes, and here's why.
As I noted in January, the headline comps number obscures the real story. Cava's newest restaurants are generating annualized average unit volumes (AUVs) north of $3 million -- putting them in elite company. The company is also guiding for restaurant-level profit margins of 23.7% to 24.2% for the full year. That's a chain operating with discipline, not desperation.
Wall Street is catching on. Analysts at Guggenheim just initiated coverage last week with a buy rating and a $100 price target.
NYSE: CAVA
Key Data Points
For Cava, the long game wins
I said in January that Cava's path to 1,000 restaurants by 2032 would make today's valuation look like a steal in hindsight. Nothing has changed that view. The company is also reportedly eyeing a Canadian pilot program as early as this year.
Cava has now proven it can post strong results, even while the macro story is ugly. That's exactly the kind of resilience I look for in a long-term compounder. The bears had their moment. The bulls are being rewarded. And in my view, this expansion story is still in its early innings.
