Cava (NYSE:CAVA) saw its shares drop 22% in premarket trading in the U.S. following a reduction in its annual restaurant sales forecast.
The Mediterranean-focused chain reported quarterly earnings of $0.16 per share for the period ending in June, above analysts’ consensus of $0.13 per share. Revenue climbed 20% year-over-year to $280.6 million, slightly below expectations of $285.6 million.
Cava also revealed plans to invest up to $10 million in Hyphen, a food service platform that leverages robotics and artificial intelligence to automate digital order production. Chipotle (NYSE:CMG), a competitor in the burrito segment, contributed an additional $15 million investment.
However, the chain lowered its same-store sales growth forecast to 4%–6%, down from the previous 6%–8% range, as CEO Brett Schulman cited a “fluid macroeconomic environment.” The report noted that President Donald Trump’s aggressive tariff policies have increased economic uncertainty, potentially causing consumers to curb discretionary spending, including dining out.
During a post-earnings call, executives added they anticipate “some very modest […] impacts” from tariffs, as some products are imported from countries affected by higher U.S. duties.
Despite the lowered sales guidance, Jefferies analysts stated that “investor skepticism remains overblown,” noting “broader strength” in Cava’s business model.
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