A banner for the Mediterranean restaurant chain Cava is displayed outside of the New York Stock Exchange (NYSE) as the company goes public on June 15, 2023 in New York City.
Spencer Platt | Getty Images
Cava on Tuesday posted a profitable quarter for its first earnings report since its initial public offering in June.
Cava’s stock surged as much as 12% in extended trading. Shares have more than doubled in value since its IPO, fueled largely by its blockbuster public market debut.
The Mediterranean restaurant company has a market value of $5.27 billion, as of Tuesday’s close.
Here’s what the company reported for the quarter ended July 9:
- Earnings per share: 21 cents
- Revenue: $172.9 million vs. $163 million
Cava reported second-quarter net income of $6.5 million, or 21 cents per share, swinging from a net loss of $8.2 million, or $6.23 per share, a year earlier.
CNBC does not compare reported earnings per share to Wall Street estimates for a company’s first report as a public company, as uncertain share counts can skew expectations.
Net sales soared 62% to $172.9 million, fueled by new restaurant openings. The chain said it opened 16 net new Cava restaurants during the period, for a total of 279.
Cava’s same-store sales climbed 18.2% in the quarter. The chain said its traffic grew 10.3%, making it an outlier in the broader restaurant industry, which has seen customer visits shrink in recent months. CFO Tricia Tolivar attributed some of the chain’s strong traffic to increased brand awareness after the company’s IPO.
However, Tolivar also said that same-store sales growth has moderated in recent weeks. More diners have also shifted from delivery orders to picking up their own warm bowls and salads, suggesting that Cava’s customer base may be pulling back on their restaurant spending.
Rival Sweetgreen reported a similar trend. Delivery orders tend to be pricier because of added fees.
Cava’s menu prices were up nearly 8% compared with the year-ago period, though executives said the restaurant chain has no plans to raise prices further.
More than a third of Cava’s quarterly sales came from digital orders in the quarter.
Looking ahead to 2023, Cava expects to report same-store sales growth for the full year of between 13% and 15%. CEO Brett Schulman cited broader economic pressures, like rising interest rates and gas prices, as the primary reason for the cautious sales forecast.
The company plans to open between 65 to 70 new locations. It’s also forecasting adjusted earnings before interest, taxes, depreciation and amortization of $62 million to $67 million.