This article first appeared on GuruFocus .
CAVA Group Inc. ( NYSE:CAVA ), the Mediterranean fast-casual restaurant chain, fell 11.89% in premarket after it reported third-quarter revenue of $356.4 million, just short of analysts' consensus of $358.4 million . Diluted EPS of $0.11 missed the $0.12 estimate. Revenue from CAVA restaurants rose 22.1% to $353.7 million, as the chain reached 500 locations after 24 net openings.
Growth at existing locations slowed sharply. Same restaurant sales rose 3.1%, down from 9.0% in the second quarter and 9.7% in the first, with menu price and mix contributing 3.0% and guest traffic slightly positive. CAVA said Cyclospora and broader concerns around fresh produce reduced the figure by about 150 basis points. Restaurant-level profit margin narrowed to 23.4% from 24.6% a year earlier, on labor investments, more third-party delivery and repair and maintenance spending. Net income fell to $13.2 million from $14.7 million, while adjusted EBITDA rose 5.7% to $42.3 million.
CAVA raised its full-year same restaurant sales guidance to 6.0% to 7.0%, from 4.5% to 6.5%. It also trimmed the top of its restaurant-level margin range from 24.3% to 24.0%, and of its adjusted EBITDA range from $191 million to $189 million, while lifting pre-opening cost guidance to $28.5 million to $29.5 million, from $22.0 million to $22.5 million.
