Cava (CAVA) is serving its investors some attractive numbers.

After the stock market closed on Thursday, the Mediterranean fast-casual chain reported its second-quarter results, which exceeded forecasts in terms of sales, profits and store exports.

Net sales increased 35.2% year over year to $231.4 million, compared to expectations of $219 million. Adjusted earnings per share were $0.17, compared to expectations of $0.13.

Store sales rose 14.4%, above the 7.45% Wall Street expected. Sales growth was driven by higher customer traffic (up 9.5% year-on-year), new locations and the introduction of grilled steaks.

Before the earnings release, Stifel analyst Chris O’Cull said the steak had “sold out quickly in many markets.”

Wedbush analyst Nick Setyan said the company expects “an acceleration in transaction trends over the next two years, primarily due to the launch of Steak.”

In the press release, CEO Brett Schulman said these results “demonstrate the strength of our category-defining brand and our unique and compelling value proposition.”

On Wednesday, Cava shares reached a record closing price of $102.39 and on Thursday a daily high of $104.84. In after-hours trading, the price rose to as high as $112.

Shares are up more than 140% year-to-date, compared to 19% for Chipotle (CMG) and 17% for the S&P 500 (^GSPC).

Slow and steady is Cava’s preferred approach to expansion. The company plans to have 1,000 Cava locations by 2032.

Citi analyst Jon Tower said in a note to clients that there is still room for growth. “A growth opportunity for the individual units that continues to provide higher, discrete same-store sales, pricing and margin opportunities as the system becomes denser and margins gain tailwinds as the footprint shifts toward lower-cost markets.”

In the second quarter, Cava opened 18 new locations, bringing the total to 341. In comparison, there were 14 new locations in the first quarter.

Cava continues to enjoy popularity at a time when fast-casual dining appears to be buckling a general downturn in the food industry as consumers prioritize quality.

Cava CEO Brett Schulman told Yahoo Finance’s Morning Brief in July that the chain was experiencing “consistent strength across all income segments.”

“We are able to offer this unique Mediterranean cuisine that combines taste and health at a reasonable price,” he said.

Chipotle beat expectations in its report after comparable-store sales rose 11.1% year over year, while Wall Street expected 9.23%. Shake Shack (SHAK) reported a 4% increase in comparable-store sales, beating estimates of 3.2%.

Sweetgreen (SG) reported its best comparable-store sales growth in two years, up 9%, driven by higher customer traffic and higher prices.

The story continues

CEO Jonathan Neman told Yahoo Finance, “We will use our pricing power very prudently.” Neman claimed the chain has increased prices fewer than its competitors since the pandemic.

“If you look at the relative price differences between Sweetgreen, some of our fast-casual competitors and QSR, you can see that the gap has narrowed significantly. You can’t get in and out of QSR for less than $15 anymore,” he told Yahoo Finance.

Here’s what Cava reported compared to Wall Street estimates, according to Bloomberg consensus data:

• revenue: $233.5 million versus $219.5 million

• Adjusted earnings per share: $0.17 vs. $0.13

• Sales growth in comparable stores: 14.4% versus 7.45%

The company has raised its fiscal year 2024 guidance for restaurant openings, revenue growth and restaurant-level profit margin.

The company now expects sales growth of 8.5 to 9.5 percent, compared to 4.5 to 6.5 percent in the first quarter. The previous forecast was 3 to 5 percent.

The total number of new restaurants will now be between 54 and 57 (previously 50 to 54). Restaurant-level profit margin is expected to be between 24.2% and 24.7% (previously 23.7% to 24.3%).

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Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on X at @Subscribe or email her at [email protected].

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