Last Update 16 Dec 25

Fair value Decreased 28%

CAVA: Long-Term Unit Expansion Will Outshine Near-Term Traffic And Margin Headwinds

Analysts have reduced their fair value estimate for CAVA Group from approximately $118.75 to $86.00 per share. This reflects trimmed revenue growth and profit margin expectations in light of softer traffic trends, macro headwinds in fast casual, and lowered near term same store sales and EBITDA forecasts, even as they still highlight the brand’s long term unit growth potential and expanding consumer adoption of Mediterranean cuisine.

Analyst Commentary

Street research following CAVA Group's latest quarterly update has broadly converged on a lower, but still constructive, valuation framework. While most firms trimmed price targets to reflect softer same store sales trends, macro pressure on discretionary dining, and more conservative 2025 EBITDA assumptions, the majority of published views continue to see meaningful upside from current levels, supported by CAVA's unit growth runway and brand momentum within Mediterranean fast casual.

Across the coverage universe, ratings largely remain in the Buy, Outperform, Overweight, or Neutral range, with few outright bearish calls. Analysts emphasize that near term estimate cuts are being driven more by sector wide traffic deceleration and tighter consumer budgets than by company specific execution issues, and they continue to cite CAVA's improving store level economics and white space for new locations as key supports for the equity story.

Many research notes also frame the recent derating of CAVA and restaurant peers as part of a broader market rotation away from higher growth consumer names, rather than a reassessment of CAVA's long term potential. In this context, lower targets in the 60 to 100 dollar range are often positioned as recalibrated, not negative, and are based on applying more conservative multiples to moderated, but still above peer, growth expectations.

Bullish Takeaways

Bullish analysts continue to highlight CAVA's status as a leading, scaled brand in the fast growing Mediterranean category, arguing that the combination of strong unit economics and a long runway for new store openings supports premium valuation multiples, even after near term estimate cuts.
Despite widespread target reductions, several bullish analysts still see double digit percentage upside, framing the stock's year to date pullback as an opportunity for investors to gain exposure to a rare high growth concept at a discounted entry point.
Positive commentary stresses that macro and traffic headwinds are cyclical rather than structural, with expectations that improving consumer trends and stabilizing same store sales could unlock multiple expansion as execution against unit growth and margin initiatives continues.
Supportive research notes also point to CAVA's inclusion among top sector picks, viewing its expanding brand awareness and growing consumer adoption as catalysts that can sustain above industry revenue growth and drive upside to current long term fair value estimates.

What's in the News

President Trump is expected to sign an order reducing tariffs on key food imports, including beef and coffee. This could ease input and grocery costs for restaurant chains such as CAVA Group and its peers (Bloomberg).
CAVA lowered its 2025 guidance and now expects same restaurant sales growth of 3.0 percent to 4.0 percent and restaurant level profit margins of 24.4 percent to 24.8 percent, down from prior targets of 4.0 percent to 6.0 percent sales growth and 24.8 percent to 25.2 percent margins (company guidance update).
The company still plans aggressive expansion in 2025, targeting 68 to 70 net new CAVA restaurant openings as it works toward its longer term goal of at least 1,000 locations by 2032 (company expansion plans).
CAVA continues to grow its national footprint with recent openings in major markets such as Miami Brickell and downtown Detroit, bringing its total footprint to more than 400 locations across 28 states and Washington, D.C., while emphasizing community day events and food donation programs at each new restaurant (company expansion announcements).
CAVA is launching its first dedicated merchandise platform, The CAVA Shop, offering brand themed apparel and accessories designed to deepen engagement with its most loyal fans and extend the brand beyond the restaurant experience (merchandise launch announcement).

Valuation Changes

Fair Value Estimate was reduced significantly from approximately $118.75 to $86.00 per share, reflecting lower growth and margin assumptions.
The Discount Rate edged down slightly from about 8.52 percent to 8.47 percent, indicating a marginally lower assumed cost of capital.
Revenue Growth moderated from roughly 23.39 percent to 22.12 percent, signaling somewhat slower expected top-line expansion.
The Net Profit Margin was cut meaningfully from about 5.77 percent to 5.08 percent, pointing to more conservative profitability expectations.
The Future P/E Multiple was reduced from around 154.9x to 122.6x, implying a lower valuation premium on projected earnings.

Surging new market performance and menu innovation signal cycle-proof growth, with national expansion and premium offerings fueling robust sales and compounding unit economics.
Operational tech investment, low marketing spend, and brand leadership in health-focused dining position the company for lasting profitability, loyalty, and elevated market share.
Aggressive expansion, supply chain risks, shifting consumer habits, labor cost pressures, and rising competition could undermine CAVA's revenue growth, margins, and long-term market position.

Catalysts

About CAVA Group

Owns and operates a chain of restaurants under the CAVA brand in the United States.What are the underlying business or industry changes driving this perspective?

While analyst consensus views CAVA's geographic expansion as a multi-year revenue growth driver, it may understate the magnitude-recent new market openings are consistently far surpassing initial average unit volume (AUV) targets, indicating that national expansion could deliver a sustained period of double-digit revenue growth and materially stronger unit economics than anticipated.
Analysts broadly agree that menu innovation and the product pipeline will support comparable sales, but the robust early success of premium protein launches (steak, tested chicken shawarma, and salmon) and the increasing frequency of new innovational launches suggest the company is on the verge of building a truly cycle-proof sales engine, implying higher mix-driven ticket growth and outsized same-store sales compounding over time.
CAVA's uniquely low marketing spend-less than peer averages as a proportion of revenue-provides untapped optionality; as brand awareness approaches mass-market levels and the business exceeds $1 billion in sales, even modest increases in targeted marketing could meaningfully accelerate new guest acquisition, digital channel adoption, and store traffic, driving both top-line and transaction growth beyond current projections.
Investments in cutting-edge operational technology (AI-driven kitchen tools, TurboChef ovens, kitchen display systems, and potential make-line automation) are expected to not only drive sustained labor and cost efficiencies, but also unlock new throughput capacity, supporting both margin expansion and greater sales capture at peak periods, substantially improving the company's long-run profitability and return on capital.
As Millennials and Gen Z continue to outpace other groups in seeking healthy, fresh dining with transparent, ethical sourcing and digital-first engagement, CAVA's first-mover status and authentic Mediterranean positioning will give it durable brand leadership-enabling premium pricing, superior loyalty economics, and robust earnings growth supported by long-term, category-defining shifts in dietary and dining preferences.

CAVA Group Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

This narrative explores a more optimistic perspective on CAVA Group compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
The bullish analysts are assuming CAVA Group's revenue will grow by 23.4% annually over the next 3 years.
The bullish analysts assume that profit margins will shrink from 13.0% today to 5.8% in 3 years time.
The bullish analysts expect earnings to reach $117.5 million (and earnings per share of $0.97) by about September 2028, down from $140.7 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 154.9x on those 2028 earnings, up from 53.8x today. This future PE is greater than the current PE for the US Hospitality industry at 23.9x.
Analysts expect the number of shares outstanding to grow by 1.2% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.52%, as per the Simply Wall St company report.

CAVA Group Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

CAVA's rapid unit expansion to new markets risks overextension, and inadequate emphasis on site quality or market cannibalization may lead to declining average unit volumes and weaker same-store sales growth, ultimately pressuring overall revenue growth and profit margins.
The company's heavy reliance on fresh, Mediterranean-sourced ingredients for its core menu and future culinary innovation leaves it exposed to commodity inflation, international supply chain disruptions, and potential tariff or climate-related shocks, which could erode gross margins and earnings.
Secular shifts in consumer behavior toward meal delivery, home cooking, and high-quality meal kits may weaken in-person fast-casual traffic over time; if CAVA's brand and experience do not differentiate strongly enough, this could suppress future revenue growth and same-restaurant sales.
Ongoing and escalating labor cost pressures, including wage increases and the need to retain and develop restaurant-level talent as CAVA grows, could reduce restaurant-level profit margins and net income, especially if wage growth outpaces productivity improvements from automation and operational initiatives.
Intensifying competition from both established fast-casual chains and digital-native "ghost kitchen" concepts may fragment market share, while a growing reliance on third-party digital platforms could compress margins further, threaten customer relationships, and limit the sustainability of current earnings expansion.

Valuation

How have all the factors above been brought together to estimate a fair value?

The assumed bullish price target for CAVA Group is $118.75, which represents two standard deviations above the consensus price target of $92.21. This valuation is based on what can be assumed as the expectations of CAVA Group's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $125.0, and the most bearish reporting a price target of just $72.0.
In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $2.0 billion, earnings will come to $117.5 million, and it would be trading on a PE ratio of 154.9x, assuming you use a discount rate of 8.5%.
Given the current share price of $65.28, the bullish analyst price target of $118.75 is 45.0% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystHighTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystHighTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystHighTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Fresh Mediterranean Dining Will Fuel Digital Expansion Amid Supply Concerns