Cava Group's FY25 Guidance Is 'Very Achievable,' Says Gary Black Despite Mixed Q4: 'Economic Model Is Powerful,' Says CFO

Restaurant chain owner CAVA Group Inc. CAVA reported a mixed fourth quarter and issued conservative guidance for the next fiscal year. While its shares fell over 4.7%, this analyst said that he expects a recovery as the provided guidance was “very achievable”.

What Happened: Managing partner at the Future Fund LLC, Gary Black highlighted that CAVA Group had issued a “conservative” guidance for the fiscal year 2025.

While CFO Tricia Tolivar said that the company expects 62 to 66 net new CAVA restaurant openings in 2025, Black highlighted the street expectations of over 64 new openings. Similarly, the company expected EBITDA between $150 million to $157 million as compared to Street’s estimate of $160.1 million.

As CAVA estimated same-restaurant sales growth of 6% to 8% in 2025, the street pegged it at 7.85%.

Despite the “conservative” guidance, the CFO said, “Our business continues to be and remains strong and resilient, and that strength is appropriately reflected in our guidance. CAVA’s economic model is powerful.”

Black in an X post said that “investors view FY'25 guidance as very achievable.”

$CAVA (-6.8% AH) beat on most 4Q metrics but gave its normal conservative start of year guidance for FY'25. I expect stock to recover as investors view FY'25 guidance as very achievable.

4Q:
– SSS Comps 21.2% vs 17.7% est
– Store openings 15 vs 13.9 est
– Revs $227.4M vs…
— Gary Black (@garyblack00) February 25, 2025

Why It Matters: Cava Group’s fourth-quarter results presented a mixed picture. While revenue reached $225.1 million, exceeding estimates, adjusted earnings fell short at 5 cents per share. The company expanded its footprint by opening 15 new restaurants, bringing the total to 367, an 18.8% year-over-year increase.

Same-restaurant sales surged by 21.2%, and restaurant-level profit grew by 28.2% to $50.4 million, with margins improving slightly to 22.4%. Digital revenue accounted for 36.8% of sales.

Price Action: CAVA fell 4.72% on Tuesday, contrasting with a 0.38% fall in the iShares Russell 2000 ETF IWM, which tracks the Russell 2000 index.

The stock remains 13.79% lower on a year-to-date basis and up 96.63% over a year.

Benzinga tracks 18 analysts with an average price target of $134.81 for the stock, reflecting a “hold” rating. Estimates range widely from $48 to $190. Recent ratings from Citigroup, Barclays, and UBS average $130.67, suggesting a potential 29.37% upside.