Why CAVA Group (CAVA) Is Down 9.5% After Lowering Sales and Margin Guidance Amid Cost Pressures

• CAVA Group, Inc. recently reported third-quarter 2025 results, showing US$292.24 million in revenue (up 20% year-over-year), but a decline in net income to US$14.75 million compared to the same period last year, as operating margins faced pressure from rising food and labor expenses.
• Despite an aggressive expansion pace and 17 new restaurants opened in the quarter, management lowered full-year guidance for same-restaurant sales growth and profit margins, emphasizing operational challenges amid ongoing economic headwinds.
• With CAVA Group revising its outlook due to softer same-restaurant sales and cost pressures, we'll examine how these updates influence the company's growth narrative.

Trump has pledged to "unleash" American oil and gas and these 22 US stocks have developments that are poised to benefit.

CAVA Group Investment Narrative Recap

To own CAVA Group stock, investors need confidence in the company’s ability to sustain rapid expansion while defending margin performance despite rising costs and slowing same-restaurant sales growth. The most important short term catalyst has been strong new restaurant openings, but the latest results and guidance cut signal that persistent inflation and soft consumer demand are now the biggest near-term risks to both earnings quality and the outlook, an impact that is material for the growth narrative.

The most relevant update is management’s decision to lower its full-year guidance for both same-restaurant sales growth and restaurant-level profit margins, citing macroeconomic headwinds. This shift is highly significant, as it reframes expectations for near-term profitability and raises questions about the pace at which CAVA can translate fast expansion into sustainable earnings momentum.

But with margins under increasing pressure, investors need to be aware that...

Read the full narrative on CAVA Group (it's free!)

CAVA Group's narrative projects $1.9 billion revenue and $126.2 million earnings by 2028. This requires 20.4% yearly revenue growth and a $14.5 million decrease in earnings from the current $140.7 million.

Uncover how CAVA Group's forecasts yield a $83.56 fair value, a 72% upside to its current price.

Exploring Other Perspectives

Private fair value estimates from the Simply Wall St Community run from US$38.45 to US$118.75, reflecting 12 unique analyses. As investor opinions differ widely, persistent pressure on restaurant-level margins remains a critical factor affecting overall sentiment and future performance.

Explore 12 other fair value estimates on CAVA Group - why the stock might be worth over 2x more than the current price!

Build Your Own CAVA Group Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your CAVA Group research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
• Our free CAVA Group research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate CAVA Group's overall financial health at a glance.

Want Some Alternatives?

Opportunities like this don't last. These are today's most promising picks. Check them out now:

• AI is about to change healthcare. These 32 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early.
• Explore 27 top quantum computing companies leading the revolution in next-gen technology and shaping the future with breakthroughs in quantum algorithms, superconducting qubits, and cutting-edge research.
• These 13 companies survived and thrived after COVID and have the right ingredients to survive Trump's tariffs. Discover why before your portfolio feels the trade war pinch.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com