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Strong new-unit openings, menu innovation, and digital upgrades are likely to support growth.
Shares of CAVA Group, Inc. (CAVA - Free Report) have declined 23% in the past month compared with the Zacks Retail – Restaurants industry’s 0.1% decline. Over the same timeframe, the stock has underperformed the Zacks Retail-Wholesale sector and the S&P 500’s growth of 4.5% and 2.3%, respectively.
Investor sentiment surrounding CAVA is likely to have been weighed down by softer same-restaurant sales growth, the lag of last year’s successful steak launch, and the “honeymoon effect” from its 2024 restaurant class. Management cautioned that a fluid macroeconomic environment has created a consumer “fog,” making demand patterns less predictable, and that it is likely to add to near-term uncertainty.
CAVA One-Month Price Performance
Image Source: Zacks Investment Research
From a technical perspective, CAVA stock is currently trading below its 50-day moving average, signaling a bearish trend.
CAVA Stock Trades Below 50-Day Moving Average
Image Source: Zacks Investment Research
Given the significant pullback in CAVA’s shares currently, investors may be tempted to snap up the stock. But is this the right time to buy CAVA? Let’s find out.
What’s Weighing on CAVA Stock?
Investor sentiment around CAVA has been unsettled by a mix of extraordinary year-over-year comparisons, a one-time boost from last year’s restaurant openings, and a murky macroeconomic backdrop. Management acknowledged that the second quarter was pressured by the overlap with 2024’s steak launch.
At the same time, the unusually strong performance of its 2024 restaurant class created a “honeymoon effect” that inflated prior-year results, making second-quarter results appear softer. Although CAVA saw momentum improve toward the end of the quarter, management cautioned that macro uncertainty remains a persistent headwind.
Rising operating costs have added another layer of pressure. Food, beverage, and packaging expenses in the second quarter increased due to steak’s higher cost profile, while other operating expenses climbed 40 basis points year over year. While these increases were partially offset by leverage from higher sales and disciplined cost management, they reinforced the perception that profitability could face constraints if headwinds persist.
Competition across the broader restaurant industry has further complicated the picture. Management noted that some peers attempted to buy sales through promotional activities, an approach that CAVA avoids. While this disciplined stance supports long-term equity, it has contributed to near-term investor concerns that it may be losing ground in an increasingly value-sensitive environment.
Can CAVA Turn Things Around?
Despite near-term pressures, CAVA continues to demonstrate structural strengths that support its long-term growth ambitions. New restaurant performance remains particularly strong, with the 2025 class opening well above expectations and trending toward average unit volumes above $3 million. This reinforces the brand's portability and gives management confidence in reaching its target of at least 1,000 locations by 2032.
Innovation is another lever the company is leaning on to reaccelerate momentum. Following encouraging market tests, it intends to roll out chicken shawarma nationally in fall. Seasonal items, such as cinnamon sugar pita chips and testing of new proteins like salmon, highlight a disciplined pipeline of offerings designed to keep guests engaged. These efforts are expected to help offset the tough comparisons from last year’s steak launch and drive incremental demand.
CAVA is also investing in its digital ecosystem to deepen customer relationships. Its enhanced loyalty program, which will soon feature a tiered rewards structure, is designed to boost engagement among its most frequent guests while broadening appeal to new customers. Promotions tied to its popular pita chips have produced record digital engagement, and management sees additional opportunities to leverage storytelling and brand-building initiatives to strengthen long-term loyalty.
Operational initiatives provide another layer of support. Technology upgrades under the Connected Kitchen platform — including new kitchen display systems, TurboChef ovens, and AI-powered food production tools — are improving accuracy, throughput, and consistency across the system. Together, these initiatives position CAVA to navigate near-term volatility and extend its competitive advantage in Mediterranean fast-casual dining.
CAVA Stock Valuation Insights
Over the past 60 days, the Zacks Consensus Estimate for CAVA’s 2025 earnings per share (EPS) has declined from 58 cents to 56 cents. Over the same time frame, estimates for industry players, including Brinker International, Inc. (EAT - Free Report) , McDonald's Corporation (MCD - Free Report) and The Cheesecake Factory Incorporated (CAKE - Free Report) , have increased 5.4%, 0.9% and 3%, respectively.
CAVA Earnings Estimate Trend
Image Source: Zacks Investment Research
CAVA stock is currently trading at a premium. CAVA is currently trading at a forward 12-month price-to-sales (P/S) ratio of 5.77, well above the industry average of 3.78. Other industry players, such as Brinker, McDonald's and Cheesecake Factory, have P/S ratios of 1.22, 8.07 and 0.78, respectively.
Image Source: Zacks Investment Research
Our Thoughts on CAVA Stock
CAVA’s long-term growth story remains intact, supported by strong new-unit performance, a robust innovation pipeline, and continued investments in digital engagement and operational efficiency. However, near-term headwinds from difficult year-over-year comparisons, rising operating expenses, and a fluid consumer environment warrant caution. At a premium valuation, much of the optimism around CAVA’s expansion potential is likely to be priced into the stock.
Key factors to watch include the nationwide rollout of chicken shawarma, the effectiveness of its tiered loyalty program in driving guest frequency, and management’s ability to sustain margin discipline while scaling. We recommend waiting for greater clarity on demand trends before adding new positions. For existing shareholders, maintaining exposure may be prudent given CAVA’s long runway and differentiated positioning, but near-term volatility is likely to persist.
Image: Bigstock
CAVA Stock Slips 23% in a Month: Should Investors Buy the Dip or Wait?
Key Takeaways
Shares of CAVA Group, Inc. (CAVA - Free Report) have declined 23% in the past month compared with the Zacks Retail – Restaurants industry’s 0.1% decline. Over the same timeframe, the stock has underperformed the Zacks Retail-Wholesale sector and the S&P 500’s growth of 4.5% and 2.3%, respectively.
Investor sentiment surrounding CAVA is likely to have been weighed down by softer same-restaurant sales growth, the lag of last year’s successful steak launch, and the “honeymoon effect” from its 2024 restaurant class. Management cautioned that a fluid macroeconomic environment has created a consumer “fog,” making demand patterns less predictable, and that it is likely to add to near-term uncertainty.
CAVA One-Month Price Performance
Image Source: Zacks Investment Research
From a technical perspective, CAVA stock is currently trading below its 50-day moving average, signaling a bearish trend.
CAVA Stock Trades Below 50-Day Moving Average
Image Source: Zacks Investment Research
Given the significant pullback in CAVA’s shares currently, investors may be tempted to snap up the stock. But is this the right time to buy CAVA? Let’s find out.
What’s Weighing on CAVA Stock?
Investor sentiment around CAVA has been unsettled by a mix of extraordinary year-over-year comparisons, a one-time boost from last year’s restaurant openings, and a murky macroeconomic backdrop. Management acknowledged that the second quarter was pressured by the overlap with 2024’s steak launch.
At the same time, the unusually strong performance of its 2024 restaurant class created a “honeymoon effect” that inflated prior-year results, making second-quarter results appear softer. Although CAVA saw momentum improve toward the end of the quarter, management cautioned that macro uncertainty remains a persistent headwind.
Rising operating costs have added another layer of pressure. Food, beverage, and packaging expenses in the second quarter increased due to steak’s higher cost profile, while other operating expenses climbed 40 basis points year over year. While these increases were partially offset by leverage from higher sales and disciplined cost management, they reinforced the perception that profitability could face constraints if headwinds persist.
Competition across the broader restaurant industry has further complicated the picture. Management noted that some peers attempted to buy sales through promotional activities, an approach that CAVA avoids. While this disciplined stance supports long-term equity, it has contributed to near-term investor concerns that it may be losing ground in an increasingly value-sensitive environment.
Can CAVA Turn Things Around?
Despite near-term pressures, CAVA continues to demonstrate structural strengths that support its long-term growth ambitions. New restaurant performance remains particularly strong, with the 2025 class opening well above expectations and trending toward average unit volumes above $3 million. This reinforces the brand's portability and gives management confidence in reaching its target of at least 1,000 locations by 2032.
Innovation is another lever the company is leaning on to reaccelerate momentum. Following encouraging market tests, it intends to roll out chicken shawarma nationally in fall. Seasonal items, such as cinnamon sugar pita chips and testing of new proteins like salmon, highlight a disciplined pipeline of offerings designed to keep guests engaged. These efforts are expected to help offset the tough comparisons from last year’s steak launch and drive incremental demand.
CAVA is also investing in its digital ecosystem to deepen customer relationships. Its enhanced loyalty program, which will soon feature a tiered rewards structure, is designed to boost engagement among its most frequent guests while broadening appeal to new customers. Promotions tied to its popular pita chips have produced record digital engagement, and management sees additional opportunities to leverage storytelling and brand-building initiatives to strengthen long-term loyalty.
Operational initiatives provide another layer of support. Technology upgrades under the Connected Kitchen platform — including new kitchen display systems, TurboChef ovens, and AI-powered food production tools — are improving accuracy, throughput, and consistency across the system. Together, these initiatives position CAVA to navigate near-term volatility and extend its competitive advantage in Mediterranean fast-casual dining.
CAVA Stock Valuation Insights
Over the past 60 days, the Zacks Consensus Estimate for CAVA’s 2025 earnings per share (EPS) has declined from 58 cents to 56 cents. Over the same time frame, estimates for industry players, including Brinker International, Inc. (EAT - Free Report) , McDonald's Corporation (MCD - Free Report) and The Cheesecake Factory Incorporated (CAKE - Free Report) , have increased 5.4%, 0.9% and 3%, respectively.
CAVA Earnings Estimate Trend
Image Source: Zacks Investment Research
CAVA stock is currently trading at a premium. CAVA is currently trading at a forward 12-month price-to-sales (P/S) ratio of 5.77, well above the industry average of 3.78. Other industry players, such as Brinker, McDonald's and Cheesecake Factory, have P/S ratios of 1.22, 8.07 and 0.78, respectively.
Image Source: Zacks Investment Research
Our Thoughts on CAVA Stock
CAVA’s long-term growth story remains intact, supported by strong new-unit performance, a robust innovation pipeline, and continued investments in digital engagement and operational efficiency. However, near-term headwinds from difficult year-over-year comparisons, rising operating expenses, and a fluid consumer environment warrant caution. At a premium valuation, much of the optimism around CAVA’s expansion potential is likely to be priced into the stock.
Key factors to watch include the nationwide rollout of chicken shawarma, the effectiveness of its tiered loyalty program in driving guest frequency, and management’s ability to sustain margin discipline while scaling. We recommend waiting for greater clarity on demand trends before adding new positions. For existing shareholders, maintaining exposure may be prudent given CAVA’s long runway and differentiated positioning, but near-term volatility is likely to persist.
CAVA currently carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.