Mediterranean restaurant chain Cava forecasts annual sales above estimates

By Sanskriti Shekhar and Juveria ‌Tabassum

Feb 24 (Reuters) - Cava ​Group ​forecast annual same-store sales above Wall Street estimates on Tuesday, betting on resilient demand for its healthy Mediterranean bowls, even as ‌higher commodity and tariff-related costs pressure its margins.

Shares of the ⁠company were up about 8% in extended trading after Cava also posted a surprise rise ‌in quarterly same-store sales.

The ‌company's customizable protein and fiber-rich Mediterranean bowls, pitas and salads priced roughly between $11 and $16 were appealing to consumers as diets change in light of ​increased adoption of appetite-supressing weight-loss drugs, CEO Brett Schulman told Reuters.

Cava expects a 1.4% price hike on some premium and side items, but ⁠would keep prices unchanged on its main chicken and falafel bowls and pitas, and launch its ​first seafood protein bowl at the end of the current quarter, Schulman added.

"There's certainly a lot of anxiety around the ​impact of AI on entry level jobs, ‌which would directly affect Gen-Z, but diving in underneath the data that consumer (is) still spending ... they have a heightened ⁠sensitivity to where they're spending their dollars," Schulman said.

Cava expects fiscal 2026 same-restaurant sales to increase between 3% and 5%, above analysts' average estimate of a 3.16% ⁠rise, according to data compiled by LSEG.

Higher prices of commodities such as beef, as ​well as elevated packaging costs, due to U.S. import tariffs, led to a decline of 60 basis points in restaurant-level profit margin to 24.4% in fiscal year 2025.

The ‌company expects a profit margin for fiscal 2026 to be below that level, between 23.7% and 24.2%.

Rival Chipotle Mexican ‌Grill also flagged margin pressure earlier this month due to higher prices of ⁠key ingredients such as beef, ‌as well as choppy ​spending.

Cava's fourth-quarter same-store sales rose 0.5%, compared with estimates of a fall of 0.85%.

(Reporting by Sanskriti Shekhar and Juveria Tabassum ‌in Bengaluru)

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