CAVA shares drop 12.5% after hours, Q3 revenue slips below estimate

CAVA said in a regulatory filing on Nov. 4 that total revenue for its fiscal third quarter, ended Oct. 4, was $356.44 million. That was below the $361.08 million consensus estimate.

Shares fell 12.5% in after-hours trading as of 5:33 p.m. ET, from a regular-session close of $61.64.

The Mediterranean fast-casual restaurant brand operates more than 500 restaurants in 31 states and Washington, D.C. Diluted earnings per share were 11 cents, against 12 cents a year earlier.

Net income was $13.2 million, down from $14.7 million. Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, adjusted for certain items, was $42.3 million, up from $40.0 million.

Here's how the company did:

• Revenue: $356.44 million vs. $292.24 million a year earlier
• Diluted EPS: 11 cents vs. 12 cents a year earlier
• Net income: $13.2 million vs. $14.7 million a year earlier
• Adjusted EBITDA: $42.3 million vs. $40.0 million a year earlier

CAVA Revenue, which excludes restaurants operating under license agreements, rose 22.1% to $353.72 million.

Same restaurant sales rose 3.1%. A 3.0% gain came from menu price and product mix, and guest traffic was slightly positive.

The company said Cyclospora and broader concerns about fresh produce consumption reduced same restaurant sales by about 150 basis points.

Co-Founder and CEO Brett Schulman said, “In the third quarter, despite broader industry pressures, we continued to gain market share, expand our footprint, and see strong performance from our new restaurants.”

The company opened 24 net new restaurants in the quarter, bringing its total to 500, up 20.5% from a year earlier.

Guidance

The company updated its fiscal 2026 guidance for net new restaurant openings, which it had set at 75 to 77 on Aug. 11.

Costs and margins

CAVA Restaurant-Level Profit Margin was 23.4%, down 120 basis points from the third quarter of fiscal 2025. The company cited incremental labor investments, a higher mix of third-party delivery, and repairs and maintenance spending.

General and administrative expenses were $38.1 million, or 10.7% of revenue, compared with $31.5 million a year earlier. Pre-opening costs were $8.4 million, up from $4.9 million.

The company said the decline in net income was primarily due to higher depreciation and amortization and higher equity-based compensation.

Cash flow

Year-to-date net cash provided by operating activities was $181.6 million. Free cash flow, or operating cash flow less purchases of property and equipment, was $37.1 million.