CAVA earnings call transcript, November 4, 2026

Thank you for joining us and welcome to CAVA's third quarter 2026 financial results conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand to withdraw your. question. Press star one again. I will now hand the conference over to Matt Milanovic, Head of Investor Relations. Matt, please go ahead.

Welcome to CAVA's third quarter 2026 financial results conference call. Before begin, if you do not already have a copy, the earnings release and related 8K furnished to the SEC are available on our website at investor.cava.com. The purpose of this conference call is to give investors further details regarding the company's financial results, as well as a general update. on the company's progress. You will find reconciliations of any non-GAAP financial measure discussed on today's call to the most directly comparable financial measure calculated in accordance with GAAP to the extent available without unreasonable efforts in today's earnings release and supplemental deck. Each of which is posted on the company's website before we begin. Let me remind everyone that this call will contain forward looking statements for this purpose. Any statements made during this call that are not statements of historical fact may be deemed to be forward looking statements. Investors should be aware that. Many forward looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in CABA's most recent annual report on form 10 K as made. be updated by its reports on form 10 Q and other filings at the SEC. Please refer to these filings for a more detailed discussion of forward looking statements and the risks and uncertainties of such statements. All forward looking statements are made as of today.

Brett Schulman.

Thanks, Matt, and welcome to the call, everyone. During the third quarter, we continued to gain market share and saw strength in new restaurant openings as we brought CAVA to more communities across the country. We also reached an important milestone as we celebrated 500 restaurants in Minnesota ahead of schedule on our goal of at least 1000 restaurants by 2032. As consumers seek real food that tastes as good as it makes them feel combined with the human connection that brings people together, our flavors, hospitality, and generosity are resonating more than ever. That combination is at the heart of what makes CAVA distinctive and reinforces our belief that CAVA is well positioned for this moment. With significant growth opportunities ahead, we remain confident in our ability to earn lasting guest loyalty, define the Mediterranean category, and create value for our shareholders for years to come. Our third quarter financial highlight include a 22.1% increase in CAVA revenue, same restaurant sales of 3.1%, 24 net new restaurants ending the quarter with 500 restaurants, a 20.5% increase year over year. Adjusted EBITDA of 42.3 million, a 5.7% increase over the third quarter of 2025, net income of 13.2 million, and 37.1 million in year. Year-to-date free cash flow. The impact of broader concerns around the consumption of fresh produce at the beginning of the quarter, followed by the reemergence of high gas prices, impacted traffic across the category.

Most importantly, these factors do not change the structural strength of our business, the health of our brand, or our ability to execute against the long-term opportunity. While we are not immune to the environment around us, we are focused on what we can control. Running great restaurants, delivering differentiated value through high-quality Mediterranean food and hospitality, and continuing to invest with discipline in our teams and guests for the long-term growth. We saw that shine through as we exited the quarter and broader concerns abated. Within this environment, our new restaurant productivity remained approximately 100%, our development pipeline remained strong, and our newest restaurant continue to reinforce the portability and resilience of the CAVA concept. We have always focused on building this business for the long term, not just for the next quarter. The same structural advantages that have driven our growth over our history remain intact, a category defining brand, a powerful unit economic model, significant white space, and a team that executes with focus and consistency. This, coupled with a strong balance sheet and a robust development pipeline, gives us confidence in our ability to navigate different operating environments while continuing to invest in long-term sustainable growth. That long-term focus is brought to life through our first pillar, expand our Mediterranean way in communities across the country.

During the third quarter, we opened 24 net new restaurants, ending the quarter with 500 locations across 30 states and the District of Columbia. As I mentioned, we opened our highly anticipated 500th restaurant and my co-founders, Ted, Ike, and Dimitri. Join me for a ribbon-cutting and celebration in Minneapolis as we continue our expansion in the Midwest. Reaching 500 restaurants ahead of schedule on our commitment of 1,000 restaurants by 2032 is more than a milestone for CAVA. It is evidence of the proven portability of our concept and the strength of the development pipeline we have built. We are also preparing to enter the Las Vegas market later this year marking another important step in CAVA's national expansion. As we are welcomed into new communities we remain equally focused on ensuring that each restaurant reflects the warmth, hospitality, and Mediterranean way that defines the CAVA experience. Recent openings continue to bring Project Soul to Life, our restaurant design initiative focused on creating warm, welcoming places where guests want to spend time. Our location at 56th and 6th in New York City showcases the new Project Soul prototype with warmer tones, green and natural light creating a more inviting dining room. As consumers increasingly seek authentic moments and inviting aesthetics, we are building upon Project Soul with the launch of Project Sunkist, which incorporates

the core elements from Project Soul into a re-imaging for legacy restaurants. We will have more details about these investments in the coming quarters. Just as our environments invite meaningful moments and deepen relationships with our guests, so do our bold Mediterranean flavors. Our pomegranate glazed salmon performed in line with our expectations and demonstrated both our ability to extend into seafood in a way that is authentic to CAVA and the trust guests have. us to bring new Mediterranean flavors to their meals. In that spirit, we have completed our roasted garlic shrimp market and operational testing and are looking forward to sharing more next quarter on the projected national rollout timeline. That same The disciplined approach to innovation comes through with our new culinary launches. In October, we introduced our Greek goddess dressing, a twist on our Greek green goddess dip sold in grocery channels, and a pomegranate apple drink that balanced slightly sweet and tart flavors in a vibrant red sip that's made for crisp fall days. We launched our new menu with a larger than life Greek goddess etched in stone in Flatiron Plaza in New York, driving social buzz and consumer engagement. We know these pulses of seasonal innovation across chips, drinks and dressings keeps the menu fresh and exciting for our guests without over complicating operations. We are also excited to announce the launch of

new packaging for our dips and spreads at the end of the year for our CPG business. This refreshed packaging is designed to create a stronger link between the CAVA experience guests know and love in our restaurants and the food they bring into their homes. As we continue to introduce more people to the Mediterranean way, this CPG business is another opportunity to extend the warmth, flavor, and quality of CAVA beyond our restaurants while reinforcing one cohesive brand wherever guests engage with us. Shifting to our Our second strategic pillar deepened personal relationships with guests even as we scale. This past quarter saw the continued growth of our loyalty platform and a focus on in person authentic moments with our guests. Over the last few months, we hosted CAVA Mediterranean Beach Club experiences at UT Austin, SMU, and the Minnesota Michigan football game. At UT Austin, that engagement translated into an encouraging loyalty signal. Loyalty purchases increased 8% in the local market the week after the pop-up compared to the prior week. Just as importantly, we want every guest to feel welcomed into CAVA, whether they are visiting us for the first time or have been part of our community for years. We recently launched a one-day mini bag drop where guests received a miniature version of CAVA's iconic yellow tote bag with purchase. It was a small but meaningful way to surprise and delight guests with something fun and wearable.

These moments are made possible through the team members who show up every day to bring care and consistency to the CAVA experience, reflecting the focus of our third strategic pillar, Run Great Restaurants Every Location, Every Shift. Run Great Restaurants starts with our ability to consistently deliver fresh, high-quality food and Mediterranean hospitality that guests expect from CAVA. Fresh food made in-house daily is core to who we are, and it requires meaningful prep work, strong supply chain collaboration, and disciplined restaurant leadership. That is why we continue to invest in tools and processes that make it easier for our teams to deliver consistent, high-quality food. Every day, from the pre-marinated chicken we are currently rolling out that reduces raw poultry handling in our restaurants, simplifies back-of-house processes, and is designed to strengthen food safety controls while improving operational and flavor consistency to the produce slicers that simplify preparation of our beloved cucumber and pickle toppings. In addition, we are rolling out a new operator portal to simplify the GM management of out-of-stock items and their control of digital order throttles. These investments are about reducing complexity for our teams and creating better, more consistent experiences for our guests. Alongside our investments. and tools and process simplification, we are learning from our teams delivering the most exceptional guest experiences. This past summer, we launched our welcome to our table hospitality contest with our GMs to identify and recognize best practices across the.

system as part of a broader effort embedding epic hospitality across CAVA. Approximately two thirds of our restaurants saw an improvement in guest experience during the exercise, giving us a clear view into the behaviors and routines that are driving results. We are now focused on scaling these practices across the system to give our teams the support they need to deliver hospitality consistently as our AUVs grow. In addition to year-over-year growth in our AUVs, demand for CAVA remains for CAVA. We have been strong in our new restaurant openings where we continue to see new restaurant productivity of approximately 100%. To support this demand, we have increased our focus on pre-opening leadership readiness and training, as well as the support. our teams receive after opening. Preliminary results are promising, with new restaurant openings that received investments seeing higher guest satisfaction and lower turnover rates. Sustaining that energy requires strong leadership and real of... Ownership at the restaurant level. That's why at CAVA we continue to invest in our general managers and provide them with opportunities to create value for themselves as they create value for our guests and for our shareholders. This past year we introduced annual... ...long-term incentive equity grants for GMs to truly have ownership in our business. Our academy GMs now at 110 locations receive elevated compensation for their academy certification. We also...

...provide additional incentives tied to GM hiring and promotions, recognizing that great leaders do more than run strong restaurants. They build strong teams and develop the next generation of leaders. We will have more in the coming quarters on additional opportunities for our... ...GMs to participate in the value creation they drive. These efforts are all part of Flavor Your Future and our ongoing commitment to making CAVA the best GM role in the industry. The restaurant industry is one... ...of the few industries where anyone can carve a path for themselves. We've always said that, as a team member, if you have the will and develop the skill, in 24 to 36 months, you can be running a multi-million dollar business making six figures. That at CAVA... our team members can build a career, not just have employment. We want our GMs to have meaningful opportunities to grow, the tools and capabilities to lead with confidence, and a tangible connection to the success they helped create. In that spirit, we recently rolled out the CAVA Command Center, which acts as a single pane of glass for operational insights and provides a centralized way for operators to track the health of their restaurant. It gives GMs real-time visibility into key restaurant vitals with the ability to benchmark performance against peers and across the broader system. The new Command Center helps leaders identify opportunities faster, recognize what is working, coach teams more effectively, and build a strong sense of ownership.

Accountability for restaurant performance and team member development. Capabilities like CAVA Command Center and the Operator Portal mentioned earlier are made possible by our new CAVA Core Data Foundation. Early results have been encouraging and we are beginning to leverage next gen capabilities built upon CAVA Core across our organization whether in our restaurants with operational insights and our analytics teams with enhanced business intelligence or through deeper customer insights enabling marketing personalization. I want to close with a note we received from a guest at our Kenwood restaurant in Cincinnati. The guest has celiac disease and shared how a team member took the time to understand her needs follow the appropriate food safety steps. Helped her navigate the menu and even prepared a fresh avocado away from the pita bread. She described the experience as some of the best service she had received in a restaurant and she said she felt safe welcomed and eager to return. That is the kind of care and ownership from our teams that we want every guest to feel at CAVA and a great example of team members bringing mediterranean hospitality to life. The progress we have made this year is a direct reflection of the commitment of our more than 15,000 team members. across the U.S. to our culture, our guests, and our collective ambition. I want to thank each of them for the care, energy, and ownership they bring to CAVA every day. With that, I'll turn it over to Tricia to walk you through.

our third quarter results and outlook. Thanks, Brett. And hello, everyone. CAVA revenue in the third quarter of 2026 grew 22.1% year-over-year to $353.7 million. During the quarter, we opened 24 net new restaurants. bringing our total CAVA restaurant count to 500. Same restaurant sales increased by 3.1%, primarily from menu price and product mix, with guest traffic slightly positive. The estimated effect on same restaurant sales from Cyclospora and broader concerns around fresh produce consumption was 150 basis points for the quarter. As Brett noted, the impact was category-wide and we continued to gain market share while maintaining positive traffic and strong new restaurant performance for the quarter. CAVA restaurant level profit in the third quarter was 82.7 million or 23.4% of revenue compared to 71.2 million or 24.6% of revenue. in the prior year quarter, representing a 16.2% increase. The decrease as a percent of revenue was driven by incremental labor investments, a higher mix of third-party delivery, as well as investment. in repairs and maintenance partially offset by leverage from higher sales. As previously shared, third-party delivery is dilutive to margin rate but has a positive impact on margin dollars due to a higher guest price. Importantly, these investments are supporting higher guest experience scores, improve new restaurant readiness, and the continued strength of our development pipeline. We remain focused on converting sales growth into attractive long-term returns while investing ahead.

Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asked. Asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. After your questions, should you wish to ask more, you can re-queue and questions will be taken as time permits. Please stand by while we compile. The Q&A roster.

Your next question comes from the line of John Ivanko with.

Hi, thank you.

When I was looking at, you know, the promotional calendar for the lack of the better word, you know, you introduced salmon in. April. So you've obviously been featuring that for quite some time. So now that we've, you know, had, you know, salmon really for a good six plus months, what have we kind of learned on that on a, you know, kind of on a post read basis? Is there anything that you would have done? Differently with salmon, a product like salmon in the future relative to what you did this year. And of course, I'm going to ask the question, how does the salmon experience, if at all, influence future of, you know, kind of bigger protein focuses outside of what you currently have? And might we actually have an opportunity to take one potentially higher frequency protein and replace it with a, or actually replace it with a lower frequency protein? Thank you. Yeah, John, thanks for the question. Uh, we're very pleased with the way salmon's performed. It's performed in line with expectations. Uh, we think the cadence is still appropriate. I know there's been an acceleration in the industry of, of LTOs in general. I think, uh, they've doubled in. Recent years, um, I think we're up to like 42,000 LTOs annually, and we're just very mindful given our dynamic growth of new restaurant openings, growth of AUVs that we do not push too many. Changes out onto our operators in a given year. So we feel very comfortable with the current cadence. And so within that cadence, we always look to say, how do we have the best portfolio of proteins or ingredients on our serving line to meet our guests needs and changing preferences and

seafood was an opportunity. It was our first foray with salmon. I think one of the learnings from salmon that was interesting is it's a four ounce filet. It's the one protein where our guests cannot break into a half and half item, which we know our guests. love to do. And so in our shrimp test, we've seen accelerated adoption because of the half and half opportunity that guests have with shrimp compared to salmon. So salmon will. Stay on the menu through spring. We had originally said through the end of the year, we're going to extend it to spring and we will have more next quarter on the official launch date of shrimp. But certainly it's a protein that our guests will be able to do half and half. I think that that can drive even increased incidents. And the other thing I'd note is in January, we're going to bring back our fan favorite white sweet potato, which has continued to build its constituency every time we brought it back on the menu and has increased its incidence rate. And of note, a lot of that incidence to my earlier comment is driven by half and half portions. So it's a unique item on our menu that guests can pair with steak or chicken as a half and half item that serves a unique purpose on the menu that our other proteins don't. So we're always analyzing the portfolio in that sense to put forward the best group of offerings for our guests.

Your next question comes to the line of Danilo Gargiulo with Bernie.

Great. Thank you. I want to touch base on the restaurant level margins, specifically on the labor component. So in the past. You've always framed the labor as a needed investment to sustain comps, but also to have better experiences for customers as well as for your own team. I'm wondering where you are in the curve of investment here, whether you're starting to see some diminishing returns on those investments. Therefore, you're getting to a point where the labor as a percentage of sales is going to be relatively stable and then potentially over time. seeing some, you know, leverage coming in as traffic rebounds, or if you see that there are still some incremental pockets of investment across your store, and if so, if you can highlight a couple of opportunities from a labor investment that you think could be the top priority in the coming.

Thanks, Milo.

So certainly we're always looking at the business and wanting to make thoughtful investments to drive the business for the long term and create a long-term durable brand that drives value to our shareholders as well. In the quarter, the investment that we delivered on in labor were around increases in wages of about 3% year-over-year, further expansion of our AGM role, the assistant general manager role that provides benefits and strength for future openings. also provides the general managers in the restaurant another leader in that four walls that can help them manage these significantly growing businesses that went from 2.4 million in AUV a couple years ago to over 3 million at 3.1 million. 1 million today and so we're seeing that that investment in the AGM role is providing bench strength and also helping to reduce general manager turnover overall which will have a long-term benefit. In the third quarter as well, Brett Rush referenced this on the call and I did too a little bit but we we added hours into our restaurants particularly in our new restaurant openings to ensure their post open success and that is reflected in the labor results that we delivered in the course. We like what we're seeing there and expect to continue to make those investments as we finish the year and go into 2027 and as it relates to a leverage and what we anticipate we're like I said at the beginning want to make sure that we're.

doing the right things for the business to drive the momentum that we're seeing and continue that for the next 12 weeks 12 years and beyond your next question comes from the line of Margaret may been stuck with.

wolf research your line is open please go ahead hi guys thanks for taking my question i guess a little bit of a follow-up and a little bit of something new i know you guys have talked about two-thirds of the restaurants with you know that top notch guest experience i mean where what do you think those restaurants are doing differently how are you scaling some of those practices across the system and are there any kind of i guess low-hanging fruit levers that you guys can pull for the rest of the system thank you yeah margaret thanks for the question um well first i'd point to 110 academy general managers that run exceptional restaurants those certainly make up a portion of those two-thirds and i think the other thing we noted uh the hospitality contest uh was a great way for us to gain the key behaviors and activities that are driving some of those exceptional hospitality results that we can scale across the system and that's going to be a focus as trisha noted you know some of the labor investments we've been making the age position uh it's it's really kind of an all of the above when you think about pre-marinated chicken our new produce slicers these are all different ways that free our team up take complexity and physical tasks off of their plate to free them up to deliver great hospitality and have those human interactions with our teams or sorry with our guests so that's been a real focus that we believe we can deliver

epic hospitality across every location every shift and so we've been very intentional about all these different activities coming at it whether it's from an equipment standpoint whether it's from a labor investment standpoint or whether it's from a best practices standpoint to set our teams up for success to deliver epic hospitality.

Your next question comes from the line of Sarah Sinatone with Bank of America. Your line is open. Please go ahead.

Your next question comes from the line of Gregory Frankfurt with Guggenheim. Your line is open. Please go ahead.

Your next question comes from the line of Sharon Zakfield with William Blair.

your line is open please go ahead.

hey good afternoon thanks for the question so last quarter you called out some of your strongest comps in the lower income markets and with the choppiness around gas prices and improvement. seeing head in 4q. how has the performance across income cohorts evolved?

thanks Jacob.

we are continuing to see our restaurants in median household income markets that are lower have the strongest and highest same restaurant sales so that trend has continued into third quarter and I'm still seeing great trends across all of our platforms and all of our environments. and then you mentioned some remodels to test elements of Project Soul. What are you looking for to learn from those restaurants about the sales opportunity and investment required and I guess as you think about a broader Sunkish rollout, how much can fit within a normal rebresh cycle and what would justify an increase in spending across the fleet? Yeah Jacob, thanks for the question. We see that our cross-channel or multi-channel users have a 3.3x frequency. So we want to make sure that it's not an either or it's an and that we have great digital and great physical experiences because when we present our guests with robust experience across all channels, we gain more occasions and more frequency from them. And when you think about how we're applying Project Sol to Project Sunkist, one of the urban locations that Tricia mentioned as a test location, post Project Sunkist remodel, we saw an 18% increase at the dinner day part as more guests came more frequently to eat in our physical space. So again, I've been on record for years saying the demise of the dining room is greatly exaggerated. And when many industry participants

have been shrinking their dining rooms or going to austere spaces littered with kiosks, we've been going the other direction and investing in warm, inviting aesthetics that drive human connection, that give our guests the opportunity and the optionality when they search. choose to come and have that human connection and a physical experience complimented by when they want a quick convenient experience where they can go and opt into one of our digital channels. So very pleased with the early returns we're seeing on the more inviting experiential. that Project Soul and now Project Sunkist are delivering.

Your next question comes from the line of Brian Harbour with Morgan Stanley. Your line is open. Please go ahead.

Your next question comes from the line of J.P. Wollum with Roth Capital Partners. Your line is open. Please go ahead.

Great.

Thanks for taking.

My questions. Just two part here on kind of some sales initiatives. First, just on the second catering market rollout, just can you share kind of what incremental knowledge you're hoping to gain? And then just the second one in terms of the loyalty program. Could you just kind of tell us, looking back over the last year and the rollout of statuses, where are you seeing the greatest impact? Is it driving the additional visit from your already frequent? What frequent guests are bringing, you know, kind of lapsed customers back? And where's the program still falling short as we think about next year? Yeah, so to your first question on catering, the goal of the second market is to really codify our strategy moving forward on whether it would be a more broad-based, chain-wide approach like we have in our current Houston market, where every restaurant produces catering to a certain matter. Or in our second market test, which we just launched about a week or two ago, a more hub and satellite model where not every restaurant produces catering. And so that is designed to have a go forward final strategy early next year for the larger rollout of catering in the future. Regarding the loyalty question, we're very pleased with the with the evolution of the program. If you think about it, you know, we we launched the reimagine program at the end of 24 phase one with the earning bank points model. At the end of 25, we launched phase two, which was the tiered status level. And what we've seen is the opportunity

to really influence behavior, to encourage folks to trade up from the sea status to the sand status, and then subsequently sand to sun to improve frequency. And, you know, now with Cava Core and Cava Current, which is our customer data platform on top of Cava Core, that gives us the tools for phase three. And phase three will kick off next year. We are shifting to a new loyalty platform next month, which will unlock ability and give us the flexibility enable the capabilities for us to roll out phase three in the next 12 to 18 months that will allow for much greater personalization and be able to truly drive and influence deeper behavior to get people to move up in those tiered staff. ...levels, thereby driving greater frequency. So very happy with the evolution of loyalty and very excited at the promise for the next phase to come.

Your next question comes from the line of Jim Sanderson with North Coast.

Your next question comes from the line of Brian Vaccaro with.

Hi, thanks and good evening.

My question is on digital sales and the last several quarters you saw some significant outsized growth in that channel and it looks like it may have moderated a bit this. quarter. Can you just elaborate on any trend changes you're seeing in third party delivery or order ahead takeout within that digital sales mix? So a portion of the digital sales shift is related to the new right now. Restaurant openings I mentioned earlier where we've turned off third party digital excuse me third party ordering in those restaurants and that's creating a bit of a mixed shift overall in the entire portfolio. So as we. Continue to see how that performs over time there really isn't anything about the consumer behavior or it's more of an intentional approach that we have. But I also believe that project soul has an impact because we're creating an. Environment for an in restaurant occasion that allows us to serve those guests in a warm environment that gives them a great experience with our food and amazing hospitality. All right, that's a helpful color and. Just one quick clarification, if I could, Tricia. On GNA, I think you said you expect 4Q to be slightly higher. I just wanted to confirm that that's being compared to the third quarter GNA X.com.

Thanks again.

It is. So in terms of GNA spend in dollars, we expect fourth quarter to be slightly higher than third quarter. And one thing I'd like to add around GNA is certainly as we identify the opportunity to invest in pre-opening costs. We wanted to reallocate some of the spend that we had originally intended to incur related to GNA and bring it into pre-open. So if you go back to the beginning of the year, we had suggested GNA as a percent of revenue would be flat to 2025. And as we finish out the year, we anticipate you will see some leverage in that GNA spend as a percent to revenue as we close out 2026.

Your next question comes from the line of Todd Brooks.

This concludes today's call.

Thank you for attending.

You may now disconnect.