Cava Group, the popular Mediterranean takeout restaurant chain, has defied expectations by reporting a profit despite the challenging economic conditions and inflationary pressures. In its fiscal third quarter, which concluded on October 1, Cava achieved earnings of 6 cents per share from revenue amounting to $173.8 million. This surpassed analysts' projections of a one cent loss per share and revenue of $171.5 million, according to FactSet.
The company experienced a significant surge in revenue, soaring by 49.5% compared to the same period last year. This remarkable growth can be attributed to the opening of 95 new restaurants as well as an increase in customer visits to existing locations.
Cava's Chief Executive, Brett Schulman, expressed his satisfaction with the outstanding performance, stating, "We witnessed an almost 50% year-over-year increase in revenue, with same-restaurant sales growing by over 14%, including a traffic growth of 7.6%. These numbers defy the trends observed in the larger sector." Analysts had projected a same-restaurant sales growth of 7.9%.
Additionally, Cava has raised its profit forecast for fiscal year 2023. It now anticipates adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $70 million to $73 million, surpassing its previous estimation of $62 million to $67 million. Moreover, the chain plans to open between 70 and 73 restaurants this year, as opposed to the previously announced range of 65 to 70.
Remarkably, Cava's strong performance has persisted despite numerous adverse factors such as inflation, high interest rates, the resumption of student loan payments, and geopolitical tensions. Schulman attributes this resilience to their unique Mediterranean cuisine that combines taste and health seamlessly. He stated, "Despite these challenges, we have maintained an exceptional value proposition by offering a distinct and flavorful dining experience. This value proposition has allowed us to remain resilient amidst broader economic headwinds."
Schulman further noted that Cava last increased its prices in January, implementing a modest 4% hike. He emphasized that their focus is not solely on the headline price but the overall value customers receive. Cava takes pride in providing satisfying and nutritious dishes at an affordable price point.
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