Cava cuts outlook as the fast-casual chain faces uncertainty, drops in same-store sales, and a sharp stock decline. In the second quarter of 2025, Cava Group reported same-restaurant sales growth of just 2.1%, far below the roughly 6% analysts had expected. Let’s explore what went wrong, what’s next, and why consumers feel wrapped in a “fog.”
Q2 2025 Performance: Growth Under Pressure
Same-store sales growth slowed to 2.1%, a steep decline from earlier quarters and significantly below market expectations. While revenue rose about 20% year-over-year to around $278–280 million, it still missed projections that were closer to $285 million.
On the positive side, adjusted earnings per share came in at $0.16, slightly above the $0.14 analysts had forecast. This shows that despite weaker traffic and revenue shortfalls, the company still managed to protect profitability in the quarter. However, weak customer traffic and softer sales weighed heavily on investor sentiment.
Management Slashes Forecast: A First Since IPO
In response to weaker-than-expected results, Cava cut its full-year same-store sales growth outlook to 4–6%, down from the prior 6–8% range. This marks the first time the company has lowered its annual guidance since going public in 2023.
Management also adjusted other parts of its outlook. The company raised its new-store opening targets to 68–70 locations for the year, up from the earlier range of 64–68. Adjusted EBITDA guidance was maintained at $152–159 million, signaling that profitability targets remain intact despite sales headwinds. Pre-opening cost estimates were raised to $15.5–16.5 million, up from $14.5–15.5 million, reflecting increased expansion activity.
Consumers Lost in the “Fog”
Cava’s leadership, including CEO Brett Schulman and CFO Tricia Tolivar, described the consumer environment as uncertain, likening it to “navigating a fog.” The slowdown in sales was particularly evident in June and early July, with consumers showing more cautious spending habits.
Tolivar noted that traffic remained flat during the quarter, even with menu changes and promotional activity aimed at driving visits. This suggests that the broader slowdown in consumer spending is proving difficult to counter, even for brands with strong marketing and seasonal offers.
Stock Reaction: A Sharp Sell-Off
The market’s reaction to the weaker guidance and revenue miss was swift. Cava’s stock dropped sharply in after-hours trading, with declines ranging from 16% to over 20%, depending on the trading period measured. This marked one of the steepest single-day drops for the company since its IPO.
Year-to-date, Cava’s share price has been under pressure, with cumulative declines of between 25% and 40%. Investors appear to be increasingly concerned about the company’s ability to maintain the rapid growth and investor enthusiasm it enjoyed in its first year as a public company.
Highlights and Resilience in the Business
While there are clear challenges, Cava’s second quarter was not without strengths. The company’s restaurant-level profitability remains healthy, supported by consistent margins. Unit economics are still solid, which is important as the company continues to expand into new markets.
Expansion efforts remain a priority, with 16 new restaurants opened in the second quarter alone. The increased full-year opening target underscores management’s belief in the brand’s growth potential. Cava also continues to push its digital strategy, with online orders and delivery playing a growing role in overall sales.
Key Watch Areas Moving Forward
Traffic Rebound
One of the most important areas to watch in the coming quarters will be whether Cava can reverse the traffic slowdown. If consumer confidence improves, particularly during the holiday season or other peak periods, it could help same-store sales recover.
Cost Control
Cava has indicated it does not plan to raise menu prices in the near term, even as inflation and other cost pressures continue. This means maintaining profitability will depend on controlling labor, food, and operational costs while keeping menu value competitive.
Store Expansion Execution
While expansion remains aggressive, ensuring that new locations achieve profitability quickly will be crucial. Poor performance from newly opened restaurants could hurt margins and slow the company’s growth story.
Macro Environment
The broader economic outlook, including employment trends, interest rates, and consumer sentiment, will continue to have a direct impact on Cava’s performance. Any improvement in these indicators could lift spending at restaurants, while deterioration could make the “fog” even thicker.
Conclusion
Cava cuts outlook in the face of softer-than-expected second-quarter sales and a challenging consumer environment. While traffic slowed and the company lowered its guidance for the first time since going public, profitability remains strong and expansion continues at a rapid pace.
The next few quarters will be critical for Cava as it works to navigate uncertain economic conditions, maintain customer loyalty, and deliver on its aggressive growth plans. Whether the company can push through the “fog” and regain momentum will determine how quickly it can return to its previous growth trajectory.
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