Cava (NYSE: CAVA) stock was already up 150% year-over-year before the restaurant chain released its second-quarter earnings report last Thursday.

The company’s success stands in stark contrast to the disappointments of other well-known companies.

For example, McDonald’s (NYSE: MCD) stock plunged last month after the company reported its first decline in store-related sales in four years.

Meanwhile, Darden Restaurants (NYSE: DRI) lost 20% of its value in the second quarter of the year. And Red Lobster, which the company sold to a private equity firm in 2014, filed for bankruptcy.

Against this background, Cava shares recorded triple-digit growth.

Why Cava shares are so successful

Compared to these other companies, Cava is a newcomer to the fast-casual scene. It was founded in 2006 and went public in 2023.

The chain serves Mediterranean cuisine and offers rice, salad and grain bowls, chicken, lamb and falafel wraps, as well as a selection of hummus, dips and sauces.

One opened in my neighborhood last year, and as someone who enjoys Mediterranean cuisine, I can tell you it was a refreshing addition to an area that had long been oversaturated with burger chains like Shake Shack and Five Guys.

It’s affordable, relatively efficient and healthier than burgers or fried chicken, making it particularly attractive to younger customers. In fact, nearly 60% of Cava’s customers are Generation Z or Millennials, according to a recent company presentation.

“They don’t want to compromise or limit themselves,” said CEO Brett Schulman Assets“They want their taste, and they also want their health.”

This was evident in Cava’s recent results:

• Revenue increased 35% to $231.4 million from $219.5 million last year.
• Net income was $19.7 million, or $0.17 per share, up from $6.5 million, or $0.21 per share, in the prior year.
• And sales in stores increased by 14.4%.

Cava also improved its full-year outlook, raising targets for profit, sales and store openings.

The company now expects revenue growth of 8.5-9.5%, compared to 4.5-6.5% in the first quarter and the previous forecast of 3-5%.

The profit margin is expected to be between 24.2% and 24.7%, compared to 23.7% last year.–24.3%.

And after adding 18 new restaurants in the last three months, Cava now plans to open 54–57 this year, compared to 50–54 in the previous instructions.

The company currently has 341 locations but aims to have 1,000 by 2032.

That’s an ambitious growth plan, and I think it’s likely to succeed. That’s because Cava has found the sweet spot between cheap fast-food chains that charge too much for low-quality food (*cough* McDonald’s *cough*) and traditional, casual restaurants that have fallen out of favor. (I’m looking at you, Red Lobster.)

“We are seeing a decline in the traditional casual dining industry, an increase in traditional quick-service restaurants and an increase in established fast-casual operators,” Schulman said.

In addition, the brand serves a food niche (Mediterranean) that has long been neglected and underrepresented, but is becoming increasingly popular – especially among younger people.

Given all of this, it’s no surprise that Cava stock has been a runaway success in an industry where overexposed competitors are suddenly treading water. I think it’s a strong long-term investment.

Keep fighting,

Jason Simpkins

Simpkins is the founder and editor of Secret inventory filesan investment service that focuses on companies with assets – tangible resources and products that can maintain and increase in value. It covers mining companies, energy companies, defense companies, dividend payers, commodities, staples, inheritances and more…

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