Shares of Cava Group (NYSE: CAVA) experienced a significant increase after the restaurant chain released a positive outlook in its fourth-quarter earnings report. The stock has risen approximately 45% year-to-date, yet it remains down around 15% from the previous year.
Let’s examine the company’s recent performance and future prospects to determine if this upward trend can be sustained.
In 2025, Cava’s stock faced challenges, with its value nearly halved. This decline was predominantly due to a substantial drop in same-store sales growth from Q2 onwards, partly attributed to the comparison with 2024’s successful grilled steak introduction.
With the difficult comparisons behind it, Cava anticipates a comparable sales growth between 3% and 5% for 2026—a notable improvement over the 0.5% growth reported in Q4 2025.
Overall revenue for the fourth quarter surged 21% year-over-year, reaching $272.8 million. The company opened 24 new restaurants in that quarter, bringing its total to 439 locations, a nearly 20% increase from the previous year.
Following its expansion into several Midwest markets in 2025, Cava aims to continue its growth in the region with plans to open new locations in Cincinnati, St. Louis, Columbus, and Minneapolis in 2026. The company targets a total of 74 to 76 new openings in fiscal 2026, aiming for at least 1,000 restaurants by 2032.
Regarding profitability, restaurant-level margins (RLMs) were reported at 21.4% for the quarter, a decrease from 22.4% the previous year, with an annual RLM of 24.4%. Cava expects RLMs to range from 23.7% to 24.2% in 2026. Additionally, adjusted EBITDA increased by 3% year-over-year to $25.8 million, with operating cash flow reaching $184.8 million and free cash flow of $26.1 million.
Cava boasts impressive average unit volumes (AUVs) of nearly $3 million and strong RLMs, leveraging a strategy similar to Chipotle, utilizing a limited range of ingredients for versatile menu options. With fewer than 450 locations, Cava is considered one of the most promising growth stories in the restaurant sector as it expands into new and existing markets.
