Cava price rises to record high as solid demand for steaks and salads boosts forecasts
Cava, on the other hand, saw a 3 percent price increase on the menu in January, and no further price increases are planned for 2024, Wedbush analyst Nick Setyan noted.
“Many have talked about a slowdown in market traffic, but we see continued momentum,” CEO Brett Schulman said in a conference call following the results release.
Consumers are forgoing cheaper fast-food options as Cava has become more competitive with quick-service restaurants due to price increases since the pandemic, said Jefferies analyst Andy Barish.
“We continue to view CAVA’s attractive value proposition, growth in advertising, increased brand awareness and menu innovations (such as steak) as growth drivers in the near to medium term,” said Wedbush’s Setyan.
Cava’s restaurant-level margin improved 40 basis points to 26.5% in the quarter as higher sales and cheaper raw material costs offset increased wages and the introduction of more expensive steaks.
If the gains continue, the stock is on track to have its best trading session ever.
Full-year revenue growth is now expected to be between 8.5% and 9.5%, up from 4.5% to 6.5% in the previous forecast. Core earnings are expected to be between $109 million and $114 million.
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Reporting by Savyata Mishra in Bengaluru; Editing by Tasim Zahid
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