On November 7, 2023, CAVA Group Inc (CAVA, Financial), a leader in the Mediterranean fast-casual restaurant space, announced its financial results for the third quarter ended October 1, 2023. The company reported a remarkable year-over-year revenue increase of 49.5% to $173.8 million, driven by a combination of new restaurant openings and a 14.1% growth in same restaurant sales, which includes a 7.6% increase in guest traffic.
Fiscal Third Quarter 2023 Financial Highlights
CAVA's impressive top-line growth was complemented by a substantial improvement in profitability. The company's net income for the quarter was $6.8 million, a significant improvement from the net loss of $11.9 million in the prior year's quarter. This profitability was supported by an increase in restaurant-level profit margin to 25.1%, up 340 basis points from the previous year, attributed to lower food, beverage, and packaging costs, and favorable product mix.
Adjusted EBITDA also saw a significant uptick, reaching $19.8 million, or 11.3% of revenue, marking a $15.0 million increase from the same quarter in the previous year. This growth reflects the positive impact of same restaurant sales growth, improved restaurant-level profit margin, and the productivity of new restaurant openings.
Operational and Strategic Developments
During the quarter, CAVA opened 11 new restaurants, bringing the total count to 290 across 24 states and the District of Columbia. The company's digital revenue mix stood at 35.5%, highlighting the brand's strong digital presence. Furthermore, CAVA's Average Unit Volume (AUV) increased from $2.4 million to $2.6 million year-over-year.
General and administrative expenses increased to $24.5 million, or 13.9% of revenue, up from $16.5 million in the previous year, mainly due to public company costs and higher performance-based accruals. However, this was partially offset by the leverage from higher sales.
Outlook for Fiscal Year 2023
CAVA Group has raised its guidance for the full fiscal year 2023, reflecting its strong performance and positive outlook. The company now expects net new restaurant openings to be between 70 to 73, same restaurant sales growth to range from 15.0% to 16.0%, and a restaurant-level profit margin of at least 24.0%. Adjusted EBITDA is projected to be between $70.0 million to $73.0 million.
Company Overview
CAVA Group Inc (CAVA, Financial) is a category-defining Mediterranean fast-casual restaurant brand known for its healthful food and bold flavors. The brand's broad appeal and favorable industry trends underpin its potential for continued growth.
The company will host a conference call to discuss the third quarter 2023 financial results and provide a business update, with a webcast available on CAVA's investor relations website.
For detailed financial tables and a reconciliation of non-GAAP financial measures, please refer to the full earnings release.
Investors and value seekers looking for more information on CAVA Group Inc (CAVA, Financial)'s financial performance can visit GuruFocus.com for comprehensive analysis and insights.
Explore the complete 8-K earnings release (here) from Cava Group Inc for further details.
