CAVA Group (NYSE:CAVA) reported a 22.1% increase in third-quarter revenue as the Mediterranean restaurant chain reached 500 locations, though higher costs and investments weighed on profit margins.
Revenue rose to $353.7 million in the third quarter of 2026, while same-restaurant sales increased 3.1%, primarily from menu prices and product mix. Guest traffic was slightly positive, Chief Financial Officer Tricia Tolivar said.
Net income fell to $13.2 million, or $0.11 per diluted share, from $14.7 million, or $0.12 per share, a year earlier. Tolivar attributed the decline primarily to higher depreciation and amortization and equity-based compensation, partly offset by improved operating performance. Adjusted EBITDA rose 5.7% to $42.3 million.
Traffic Pressures and Restaurant Margins
Tolivar estimated that Cyclospora and broader concerns about fresh produce consumption reduced quarterly same-restaurant sales growth by 150 basis points. Co-Founder and Chief Executive Officer Brett Schulman said higher gas prices also affected traffic across the category after Labor Day.
Schulman said sales trends strengthened as the quarter ended and continued into the fourth quarter. He did not provide a specific fourth-quarter sales figure, but said the midpoint of the company’s full-year guidance range was the most likely outcome.
Restaurant-level profit rose 16.2% to $82.7 million, but the margin narrowed to 23.4% of revenue from 24.6% a year earlier. Tolivar cited labor investments, a higher mix of third-party delivery and spending on repairs and maintenance, partly offset by leverage from higher sales.
The company said it added employee hours to support service and new restaurant openings and increased team member wages by about 3% year over year. Tolivar said CAVA expects to continue those investments through the end of 2026 and into 2027.
Expansion and Updated Outlook
CAVA opened 24 net new restaurants during the quarter, ending with 500 locations across 30 states and the District of Columbia. The company plans to enter Las Vegas later this year and maintains a goal of at least 1,000 restaurants by 2032.
Schulman said new restaurant productivity remained approximately 100%. Tolivar said the company had temporarily turned off third-party ordering and, where applicable, catering at new restaurants to help teams focus on in-person guests. The approach has improved guest experience scores, she said, while having some short-term effect on sales.
For full-year 2026, CAVA updated its outlook to include:
- 76 to 78 net new restaurant openings.
- 6% to 7% same-restaurant sales growth.
- 23.7% to 24% restaurant-level profit margin.
- $28.5 million to $29.5 million in pre-opening costs.
- $184 million to $189 million in adjusted EBITDA, including pre-opening costs.
Tolivar said the company anticipates at least 16% unit count growth in 2027, citing its real estate pipeline. Its long-term model calls for low- to mid-single-digit same-restaurant sales growth.
Investments, Menu Plans and Capital
Pre-opening expenses rose to $8.4 million from $4.9 million a year earlier, reflecting more units under construction and additional training. Tolivar said CAVA expects to continue spending approximately $50,000 to $60,000 more per restaurant than its historical pre-opening run rate, though total per-restaurant pre-opening costs should be lower in 2027 than this year.
Schulman said turnover among general managers receiving additional pre-opening training had dropped to low single digits. CAVA is also rolling out pre-marinated chicken and produce slicers to simplify preparation. Tolivar said the chicken rollout and fuel surcharges are expected to increase food, beverage and packaging costs as a percentage of revenue in the fourth quarter.
On the menu, Schulman said Pomegranate Glazed Salmon performed in line with expectations and will remain available through spring, longer than originally planned. CAVA has completed market and operational testing of roasted garlic shrimp and expects to provide more information next quarter on its national rollout timeline.
The company ended the quarter with no debt outstanding and $427.9 million in cash and investments. Its board authorized a share repurchase program of up to $100 million, although Tolivar said no shares had been purchased under the program to date. She said new restaurants remain the company’s highest and best use of capital, generating more than 40% cash-on-cash returns in their first year.
About CAVA Group (NYSE:CAVA)
CAVA Group, Inc operates CAVA, a fast-casual restaurant brand serving Mediterranean-inspired food in the United States. Its menu includes customizable bowls and pitas, salads, dips, spreads, grilled proteins, and other Mediterranean dishes, with options designed to accommodate a range of dietary preferences.
The company’s restaurants generally use an assembly-line format that allows customers to build meals from a selection of ingredients and sauces. CAVA also offers its branded dips, spreads, and other products through select grocery and retail channels, extending the brand beyond its restaurant locations.
CAVA was founded in 2010 by Dimitri Moshovitis, Ike Grigoropoulos, and Ted Xenohristos.
