Cava Group Inc (CAVA) Q3 2026 Earnings Call Highlights: 500 Restaurants and 22% Revenue Growth ...

Negative Points

• Cava Group Inc ( NYSE:CAVA ) restaurant-level profit margin decreased to 23.4% from 24.6% in the prior year quarter, due to labor investments, higher third-party delivery mix, and increased repairs and maintenance.

• Cava Group Inc ( NYSE:CAVA ) net income declined to $13.2 million from $14.7 million in the prior year quarter, and diluted EPS fell to $0.11 from $0.12.

• Cava Group Inc ( NYSE:CAVA ) pre-opening expenses increased to $8.4 million from $4.9 million, reflecting higher costs to support new restaurant openings.

• Cava Group Inc ( NYSE:CAVA ) anticipates food, beverage, and packaging costs to increase as a percent of revenue in Q4 due to fuel surcharges and the rollout of pre-marinated chicken.

• Cava Group Inc ( NYSE:CAVA ) faces external pressures such as high gas prices and consumer concerns about fresh produce, which impacted traffic in Q3 and could affect future performance.

Q & A Highlights

Q: The updated full-year guidance implies fourth-quarter comps of roughly 1.5% to 6%. How has the quarter started, and where within that range do current trends put you? A: CEO Brett Schulman said the start of Q3 was pressured by broader concerns around fresh produce consumption, which rebounded, followed by post-Labor Day choppiness as gas prices spiked. That abated as the company exited the quarter, comps strengthened, and those trends have continued into Q4. The guidance range reflects what management sees as the highest probability, with the midpoint the most likely outcome for the full year.

Q: Pre-opening costs moved roughly $7 million higher in the updated guidance, but only one unit was added to the opening guide. Is the heavier spend the new run rate, or are you getting a head start on the 2027 class? A: CFO Tricia Tolivar said the increase reflects deliberate investment in robust new restaurant openings, including bringing GMs and team leads in earlier and sending them to other openings to train, at about $50,000 to $60,000 per restaurant. The quarter also included Project Sol remodel tests and some urban locations with longer development timelines and higher costs. For 2027, per-restaurant pre-opening costs will not be as high as currently, but will run about $50,000 to $60,000 above historical rates.

Q: Where are you in the curve of labor investment, and are you seeing diminishing returns or still incremental pockets of opportunity? A: CFO Tricia Tolivar said Q3 labor investments included about a 3% year-over-year wage increase, further expansion of the AGM role (now in roughly 75% of restaurants), and added hours, particularly in new restaurants, to support post-opening success. She said the AGM investment is strengthening restaurants and reducing GM turnover, and the company expects to continue these investments through the end of 2026 and into 2027 rather than pulling back for near-term leverage.

Q: Have you quantified the impact of your managerial and hourly labor investments on turnover, and where are you versus target? A: CEO Brett Schulman said Academy GMs show low- to mid-single-digit turnover, and GM and team member turnover have steadily declined as investments continue. Since extending GM training by three additional months, turnover in that population has dropped to almost zero, or low single digits, versus much higher levels previously. He said the company will accept 20 to 30 basis points of restaurant-level margin or higher pre-opening costs in a given period to support long-term sustainable growth.

Q: What have you learned from salmon after six-plus months, and how does that influence future protein strategy, including shrimp? A: CEO Brett Schulman said pomegranate glazed salmon performed in line with expectations and will stay on the menu through spring, extended from the original end-of-year plan. A key learning is that salmon is a four-ounce filet guests cannot order as a half-and-half item, while the roasted garlic shrimp test has seen accelerated adoption because guests can pair it half-and-half. The company will share the shrimp national rollout timeline next quarter and will bring back fan-favorite white sweet potato in January.

Q: How has performance across income cohorts evolved amid gas-price choppiness, and what is driving the strength in lower-income markets? A: CFO Tricia Tolivar said restaurants in lower median household income markets continue to post the strongest and highest same-restaurant sales, a trend that continued into Q3. She said the outperformance is driven by transaction growth, and lower-income cohorts are actually indexing higher on premium protein attachments, which she called counterintuitive. She credited the barbell menu, with an entry price point of $10.65 for chicken, falafel or roasted vegetables with unlimited toppings, alongside the option to add premium proteins.

Q: What are you learning from the Project Sunkist remodels, and how much could fit within a normal remodel cycle? A: CEO Brett Schulman said multi-channel guests have 3.3x the frequency of single-channel guests, so the company wants great digital and physical experiences rather than choosing one. At one urban test location remodeled under Project Sunkist, dinner daypart sales rose 18% as more guests came more frequently to dine in. He said Cava is investing in warm, inviting dining rooms while much of the industry shrinks them, and more details on the Sunkist investment will come in future quarters.

Q: New store productivity looked like it downshifted from the first half into Q3. Is that timing, market mix or honeymoon effects, and are the added opening resources paying off? A: CFO Tricia Tolivar said the biggest factor is the timing of openings within the quarter, and with better visibility into that timing, new restaurant productivity would be right at 100%. She said Cava has also turned off third-party delivery and, where applicable, catering in new restaurants so teams can deliver a strong in-restaurant guest experience without delivery-driver distractions. That has a small short-term sales impact but is viewed as best for long-term brand and operational success.

Q: What is the goal of the second catering market test, and where is the loyalty program having the greatest impact? A: CEO Brett Schulman said the second catering test, launched about a week or two earlier, is a hub-and-satellite model where not every restaurant produces catering, compared with the broad-based Houston model. The goal is to codify a final strategy early next year ahead of a larger rollout. On loyalty, he said the tiered status program is successfully encouraging guests to trade up from Sea to Sand to Sun status and increase frequency, and Phase 3 will launch next year on a new loyalty platform to enable greater personalization over the next 12 to 18 months.

Q: Digital sales growth appears to have moderated. Are you seeing trend changes in third-party delivery or order-ahead takeout? A: CFO Tricia Tolivar said part of the digital mix shift reflects new restaurant openings where third-party ordering has been intentionally turned off, not a change in consumer behavior. She also believes Project Sol is having an impact by creating a warm in-restaurant environment that gives guests a great experience with food and hospitality. On G&A, she confirmed fourth-quarter spend in dollars will be slightly higher than Q3, with some spend reallocated from G&A into pre-opening costs, leaving G&A leverage as a percent of revenue for the full year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .