Cava Group's annual sales growth target falls short of estimates

(Reuters) - Cava Group on Tuesday forecast annual same-store sales growth largely below estimates as weak demand for dining out in the United States forces restaurants to take a cautious stance on their expectations for the year.

Consumers are expected to continue being watchful about spending on dining out in 2025, wary of inflation and pricier menus, with companies such as Domino's pointing to another "challenging year" for the industry.

Cava expects annual same-restaurant sales to rise 6% to 8%, compared with the average analyst estimate of an 8.17% rise, according to data compiled by LSEG. Its shares fell 4% after close.

However, the company's Mediterranean meals as well as its watchful restraint in lifting prices helped it beat quarterly estimates through 2024, attracting demand from a younger customer base.

The company raised prices in January by 1.7%, Cava CEO Brett Schulman said.

"That's all we plan to take for the rest of the year, understanding the impacts of inflation our guests have felt in their everyday life."

Burrito chain Chipotle Mexican Grill also lifted prices by about 2% in December for the first time in about a year, and said earlier this month it expects the hike to carry through for the rest of the year.

Cava's same-restaurant sales rose 21.2% in the fourth quarter, surpassing estimates of 18.2%, while revenue of $227.4 million also beat expectations, helped by the launch of its popular grilled steak, as well as resilient demand for its pita wraps and salad bowls.

The company would also look to introduce fresh status tiers and non-food rewards on its revamped loyalty program, which has also provided a sales boost since its relaunch in October last year, Schulman added.

The company reported earnings per share of 66 cents for the fourth quarter, compared with estimates of 6 cents.

(Reporting by Juveria Tabassum in Bengaluru; Editing by Shounak Dasgupta)

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