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.