Cava CFO Discusses Sales Outlook, Consumer Spending, and Growth Strategy

Cava's Sales Outlook and Consumer Behavior

• 📉 Cava has lowered its full-year sales growth targets due to a slowdown in foot traffic during the third quarter.
• ⚠️ This trend reflects financially strained consumers increasingly pulling back on spending at fast-casual restaurants.
• 💡 Despite broader consumer pressure, Cava's CFO notes the chain is becoming 'more accessible for the lower income consumer', which is driving sales growth in that demographic.

Impact of External Factors

• 🏛️ A government shutdown in mid-October led to a noticeable, though not significant, step down in spending in affected markets (DC, Maryland, Virginia).
• 📈 The company is also lapping strong same-restaurant sales from the prior year's fourth quarter (21%), which influences current outlook.

Growth and Investment Strategy

• 🚀 Cava intends to continue expanding its restaurant footprint, with plans to open at least 68-70 restaurants this year and targeting at least 16% growth in 2026.
• 💰 New restaurants are performing well, with average unit volumes exceeding $3 million, surpassing the chain average and underscoring brand strength.
• 🛠️ Investments are being made in operational efficiencies, such as kitchen display systems and Turbo Chef ovens, to streamline operations and improve accuracy for team members.

Cost Management and Pricing

• 📊 Tariffs have impacted food, beverage, and packaging costs, contributing about 20 basis points to costs in the quarter, with expectations for these to continue into 2026.
• ⚖️ Cava has minimized price increases to absorb these costs, aiming to maintain its value proposition and absorb incremental costs rather than passing them directly to guests.
• 📈 Over the long term, Cava has raised prices less than 10% below CPI and significantly less than many industry peers, a strategy they intend to continue.

Shareholder Returns and Labor Market

• 📈 While the share price has declined, Cava remains focused on its long-term strategy of expanding the Mediterranean concept and enhancing guest relationships.
• 🧑‍💼 The company actively monitors the labor market and ensures competitive wages in all operating markets to attract and retain high-quality team members.