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Cava Bowls Defy Costs: Sales Surge on Healthy Eating Trend
25 Feb
Summary
- Cava anticipates fiscal 2026 same-restaurant sales growth of 3% to 5%.
- Higher commodity and tariff costs reduced fiscal 2025 profit margin.
- Company expects resilient demand for healthy Mediterranean bowls.
Cava Group has projected fiscal 2026 same-store sales to increase between 3% and 5%, surpassing analysts' average estimate of 3.16%. This optimistic forecast is underpinned by the enduring popularity of its healthy Mediterranean bowls, pitas, and salads.
These offerings, priced between $11 and $16, are resonating with consumers adapting their diets, influenced partly by the rise of weight-loss drugs. CEO Brett Schulman highlighted that consumers remain engaged in spending, though they are increasingly mindful of their expenditures.
However, Cava's restaurant-level profit margin experienced a 60 basis point decline to 24.4% in fiscal year 2025. This was attributed to increased commodity prices for items like beef and higher packaging expenses stemming from U.S. import tariffs. For fiscal year 2026, the company anticipates its profit margin to range between 23.7% and 24.2%.
In a competitive landscape, rival Chipotle Mexican Grill also recently reported margin pressures due to rising ingredient costs. Cava's fourth-quarter same-store sales, however, saw a 0.5% increase, defying expectations of a decline.
