Cava same-store sales grew 3.1% in third quarter
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Cava raised its guidance for the year, saying same-store sales would grow between 6% and 7%Photo courtesy of Cava
The cyclospora outbreak took a bite out of Cava’s sales in the third quarter.
The company said Wednesday that same-store sales grew 3.1% during the Oct. 4-ended quarter, which largely reflected menu pricing and mix. Traffic was “slightly positive,” the company said.
That’s a slowing of same-store sales trends from earlier in the year, when the fast-casual chain saw comparable sales grew 9% in the prior second quarter, with a 5.3% increase in traffic, and 10% in the preceding first quarter, with traffic up 6.8%.
Consumer fears about fresh produce during the cyclospora outbreak earlier this year was blamed for a 150 basis-point decline in third-quarter comparable sales. Cava wasn’t implicated in the outbreak, which was tied to iceberg lettuce. But consumers stayed away from salad-heavy concepts for weeks as thousands were sickened and food-safety officials attempted to determine the source.
Cava CEO and co-founder Brett Schulman said the fast-casual chain also saw some “choppiness” when gas prices spiked after Labor Day.
Still, he also expressed optimism for the broader outlook, based on sales trend strength at the end of the third quarter and into the fourth.
“Structurally, we’re more confident in the business than ever,” he said. “No matter what the environment, short term, and the exogenous macro or geopolitical challenges around us, the health of the business is shining through underneath.”
The company raised its guidance, projecting same-store sales for the year will grow between 6% to 7%. That’s up from earlier projections of 4.5% to 6% comparable sales growth.
The chain raised menu prices 1.5%, but that was on premium and attachment items only, not on the base bowl price, which Schulman said hasn’t been increased in about two years.
Cava also expects it will end the year with 76 to 78 net new restaurant openings, up from earlier estimates of 75 to 77. The chain added 24 net new restaurants during the quarter, bringing the total unit count to 500, a more than 20% increase year over year.
Schulman said the chain’s popular salmon will remain on the menu into the spring, which is longer than previously expected. A new Garlic Shrimp, which Schulman said has done well in test, will be rolled out next year, but the timing is yet to be determined.
The chain’s average unit volume also ticked up to $3.1 million, compared with $2.9 million a year ago.
Revenues grew 22.1% to $353.7 million, driven by 102 net new openings this year, with newer restaurants exceeding performance expectations, the company said.
Net income for the quarter was $13.2 million, down from $14.7 million a year ago, which was blamed on higher depreciation and amortization, including the impact of capital investments to enhance the restaurant experience and higher equity-based compensation, which was offset partially by improved operating performance.
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