Mediterranean restaurant chain Cava lifts annual sales growth forecast, shares jump

Restaurant Brands International

12/11/2024 23:33

Nov 12 (Reuters) - Cava Group  CAVA.N  lifted its annual
same-restaurant sales forecast on Tuesday, signaling that demand
for its pita wraps and salad bowls was holding up well even as
the wider restaurant industry grapples with a consumer spending
slowdown.
    Shares of the Mediterranean restaurant chain, which made its
market debut in June last year, rose 13.1% after the bell. The
stock has more than tripled in value so far this year.
    Cava now expects 2024 same-restaurant sales growth of 12% to
13%, up from previous expectations of 8.5% to 9.5%. The
fast-casual chain also exceeded third-quarter sales estimates.
    The company's Mediterranean offerings coupled with its
cautious approach to raising menu prices have been attracting
younger crowds to its restaurants, even as fast-food chains such
as McDonald's  MCD.N  and Burger King  QSR.TO  have been
embroiled in value wars to attract demand.
    The company also completed a re-launch of its loyalty
program in the reported quarter.
    "We've seen great growth in brand awareness in Gen-Z and
even Gen Alpha customer segments, given some of the momentum we
have on social channels," said CEO Brett Schulman on a
post-earnings call.
    Foot traffic at Cava's restaurants grew 27.5% in the third
quarter compared with a year ago, outpacing traffic growth of
2.2% for the overall fast-casual segment, according to data from
Placer.ai.
    "Cava is increasingly attracting a wider customer base — the
median household income of its captured market has fallen
steadily since 2021, and its visitor base increasingly includes
younger consumer segments," said Placer.ai in a report from
October.
    The company also lifted its target for net new restaurant
openings and restaurant-level profit margin.
    Its third-quarter revenue rose 39% to $241.5 million,
beating estimates of $233.6 million, according to data compiled
by LSEG.

 (Reporting by Christy Santhosh and Juveria Tabassum in
Bengaluru; editing by Alan Barona)
 ((Christy.Santhosh@thomsonreuters.com))