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CAVA Shares Tumble 15% in a Month: Buy the Dip or Brace for More Pain?
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Key Takeaways
CAVA shares have dropped 15.2% in a month, underperforming the industry and broader market.
Same-restaurant sales rose 10.8% in 1Q25, with strong traffic across all income levels and regions.
CAVA's loyalty program boosted revenue share and nears 8M members, fueling customer retention and growth.
CAVA Group, Inc. (CAVA - Free Report) shares have declined 15.2% in the past month against the industry and the S&P 500’s growth of 2.1% and 5%, respectively. The recent decline can be primarily attributed to high costs and economic uncertainty.
The company continues to monitor consumer sentiment, tariffs and inflation but sees no signs of weakness in spending or demand.
CAVA Trades 53% Below Its 52-Week High
The stock closed at $81.25 yesterday, well below its 52-week high of $172.43 but above its 52-week low of $70. In the past month, CAVA underperformed industry players like Chipotle Mexican Grill, Inc. (CMG - Free Report) , Brinker International, Inc. (EAT - Free Report) and Wingstop Inc. (WING - Free Report) .
CAVA’s Price Performance
Image Source: Zacks Investment Research
CAVA’s Estimate Trend
The Zacks Consensus Estimate for earnings per share has seen upward revisions. In the past 30 days, analysts have increased their estimates for the current year by 5.5% to 58 cents, indicating year-over-year growth of 38.1%. Then again, Chipotle, Brinker and Wingstop’s earnings for the current year are likely to witness year-over-year growth of 8.1%, 113.7% and 6.6%, respectively.
Image Source: Zacks Investment Research
Robust Same-Restaurant Sales & Traffic Growth Aid CAVA
The company continues to impress investors with its robust same-restaurant sales growth. In first-quarter 2025, the company’s same-restaurant sales increased 10.8%, driven by a 7.5% gain in traffic. CAVA has positive traffic across all dayparts, geographies and income levels, even outperforming in lower-income segments.
On a three-year stacked basis, same-restaurant sales rose 41.5%, fueled by a 24.7% increase in guest traffic. For 2025, the company expects same-restaurant sales growth of 6-8%.
Unit Expansion Bodes Well for CAVA
The company is focusing on expanding its footprint. In first-quarter 2025, the company opened 15 net new restaurants, bringing the total restaurant count to 382. In fiscal 2025, the company expects to open 64-68 net new CAVA restaurants, up from the prior mentioned 62-66.
The company said that new locations are exceeding expectations in sales and margins. New markets like Indiana, Miami and Lafayette, LA, are showing strong reception. The company remains focused on its growth strategy, with plans to enter new markets in Detroit and Pittsburgh as it continues expanding across the Midwest and Mid-Atlantic regions. Management reaffirmed its long-term goal of operating at least 1,000 restaurants by 2032, aiming to create more opportunities for community connection and Mediterranean-inspired hospitality.
Loyalty Program Aids CAVA
CAVA has experienced strong impetus following the relaunch of its reimagined loyalty program, with sales through the program increasing by 340 basis points as a percentage of total revenues. Membership has grown significantly, now nearing 8 million members.
The success of limited-time incentives tied to new menu items, such as the garlic ranch pita chips, underscores the potential of this platform to support future innovation and drive repeat visits. Additionally, the continued evolution of the program, through tiered statuses and non-food perks, is expected to deepen brand affinity and strengthen consumer retention.
The company plans to introduce the next phase of the program later this year, which will include testing a new tiered structure aimed at better aligning rewards with guest preferences and driving deeper long-term engagement.
CAVA Trades at a Premium
Despite its recent decline, CAVA is currently priced at a premium relative to its industry, with a forward 12-month price-to-sales (P/S) ratio of 7.19, above the industry average. Conversely, other industry players like Chipotle, Brinker and Wingstop are trading at 5.21X, 1.42X and 12.38X, respectively.
Image Source: Zacks Investment Research
End Notes
CAVA remains a compelling long-term growth story with strong brand momentum, robust traffic trends, expanding unit economics and an increasingly powerful loyalty platform. The company's continued ability to outperform across income levels and geographies, alongside its disciplined expansion into new markets, reinforces confidence in its execution and strategic vision.
However, the recent share price pullback reflects near-term pressures from elevated input costs and broader macroeconomic uncertainty, which, combined with its premium valuation, limit the margin of safety for new investors.
While long-term fundamentals remain intact, existing investors should hold their position to benefit from CAVA's operational strength and growth potential, but fresh entries should be approached cautiously until a more attractive entry point emerges. CAVA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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CAVA Shares Tumble 15% in a Month: Buy the Dip or Brace for More Pain?
Key Takeaways
CAVA Group, Inc. (CAVA - Free Report) shares have declined 15.2% in the past month against the industry and the S&P 500’s growth of 2.1% and 5%, respectively. The recent decline can be primarily attributed to high costs and economic uncertainty.
The company continues to monitor consumer sentiment, tariffs and inflation but sees no signs of weakness in spending or demand.
CAVA Trades 53% Below Its 52-Week High
The stock closed at $81.25 yesterday, well below its 52-week high of $172.43 but above its 52-week low of $70. In the past month, CAVA underperformed industry players like Chipotle Mexican Grill, Inc. (CMG - Free Report) , Brinker International, Inc. (EAT - Free Report) and Wingstop Inc. (WING - Free Report) .
CAVA’s Price Performance
Image Source: Zacks Investment Research
CAVA’s Estimate Trend
The Zacks Consensus Estimate for earnings per share has seen upward revisions. In the past 30 days, analysts have increased their estimates for the current year by 5.5% to 58 cents, indicating year-over-year growth of 38.1%. Then again, Chipotle, Brinker and Wingstop’s earnings for the current year are likely to witness year-over-year growth of 8.1%, 113.7% and 6.6%, respectively.
Image Source: Zacks Investment Research
Robust Same-Restaurant Sales & Traffic Growth Aid CAVA
The company continues to impress investors with its robust same-restaurant sales growth. In first-quarter 2025, the company’s same-restaurant sales increased 10.8%, driven by a 7.5% gain in traffic. CAVA has positive traffic across all dayparts, geographies and income levels, even outperforming in lower-income segments.
On a three-year stacked basis, same-restaurant sales rose 41.5%, fueled by a 24.7% increase in guest traffic. For 2025, the company expects same-restaurant sales growth of 6-8%.
Unit Expansion Bodes Well for CAVA
The company is focusing on expanding its footprint. In first-quarter 2025, the company opened 15 net new restaurants, bringing the total restaurant count to 382. In fiscal 2025, the company expects to open 64-68 net new CAVA restaurants, up from the prior mentioned 62-66.
The company said that new locations are exceeding expectations in sales and margins. New markets like Indiana, Miami and Lafayette, LA, are showing strong reception. The company remains focused on its growth strategy, with plans to enter new markets in Detroit and Pittsburgh as it continues expanding across the Midwest and Mid-Atlantic regions. Management reaffirmed its long-term goal of operating at least 1,000 restaurants by 2032, aiming to create more opportunities for community connection and Mediterranean-inspired hospitality.
Loyalty Program Aids CAVA
CAVA has experienced strong impetus following the relaunch of its reimagined loyalty program, with sales through the program increasing by 340 basis points as a percentage of total revenues. Membership has grown significantly, now nearing 8 million members.
The success of limited-time incentives tied to new menu items, such as the garlic ranch pita chips, underscores the potential of this platform to support future innovation and drive repeat visits. Additionally, the continued evolution of the program, through tiered statuses and non-food perks, is expected to deepen brand affinity and strengthen consumer retention.
The company plans to introduce the next phase of the program later this year, which will include testing a new tiered structure aimed at better aligning rewards with guest preferences and driving deeper long-term engagement.
CAVA Trades at a Premium
Despite its recent decline, CAVA is currently priced at a premium relative to its industry, with a forward 12-month price-to-sales (P/S) ratio of 7.19, above the industry average. Conversely, other industry players like Chipotle, Brinker and Wingstop are trading at 5.21X, 1.42X and 12.38X, respectively.
Image Source: Zacks Investment Research
End Notes
CAVA remains a compelling long-term growth story with strong brand momentum, robust traffic trends, expanding unit economics and an increasingly powerful loyalty platform. The company's continued ability to outperform across income levels and geographies, alongside its disciplined expansion into new markets, reinforces confidence in its execution and strategic vision.
However, the recent share price pullback reflects near-term pressures from elevated input costs and broader macroeconomic uncertainty, which, combined with its premium valuation, limit the margin of safety for new investors.
While long-term fundamentals remain intact, existing investors should hold their position to benefit from CAVA's operational strength and growth potential, but fresh entries should be approached cautiously until a more attractive entry point emerges. CAVA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.