The Mediterranean takeout restaurant chain
Cava Group
reported an unexpected profit, shrugging off the effects of inflation and a generally uncertain economy.
After the close of trading on Tuesday,
Cava
(ticker: CAVA) reported earnings of 6 cents a share from revenue of $173.8 million for its fiscal third quarter, which ended Oct. 1. Analysts surveyed by FactSet were expecting the company to post a loss of a penny a share from revenue of $171.5 million.
Revenue jumped 49.5% from the same time last year as the chain opened 95 restaurants and more people visited its existing outlets, the company said.
“It was almost a 50% year-over-year increase in revenue, over 14% same- restaurant sales including 7.6% traffic growth, which kind of bucked the trend of what we’ve seen across the sector at large,” Chief Executive Brett Schulman said in an interview with Barron’s. Analysts were expecting same-restaurant sales growth of 7.9%.
Cava
also increased its forecast for profit in its fiscal 2023. The company now expects adjusted earnings before interest, taxes, depreciation, and amortization of between $70 million and $73 million, up from the $62 million to $67 million it had predicted.
The chain, which went public in June, now plans to open 70 to 73 restaurants for the year, compared with the 65 to 70 it had told investors to expect.
The strong performance comes regardless of inflation, high interest rates, the resumption of payments on student loans, and worry about tensions overseas.
“In spite of all that, we’ve been able to drive a really great value proposition with very differentiated unique cuisine—that Mediterranean cuisine, where taste and health unite—that’s allowed us to be resilient in the face of those broader headwinds,” Schulman said.
Schulman said the last time the company raised prices was in January, with an increase of about 4%. “When we talk about value proposition, it’s not necessarily the headline price, but it’s really the bang for the buck and the idea that you’re getting this really satisfying, healthful bowl of food, or pita, for a great price,” he said.
Write to Angela Palumbo at [email protected]
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