CAVA's New Openings Hit $3M AUV: Is the Growth Model Sustainable?

CAVA Group, Inc. CAVA is leaning into its expansion strategy, with newly opened restaurants delivering average unit volume (AUV) above $3 million — well ahead of the company’s $2.3 million target. These results highlight the brand’s strong portability across markets and validate management’s goal of surpassing 1,000 units by 2032. In the second quarter of 2025, the Mediterranean fast-casual chain added 16 net new restaurants, ending the period with 398 locations, reflecting an increase of 16.7% year over year.

CAVA entered the second quarter with solid momentum, supported by robust performance from its 2024 and 2025 restaurant classes. Year-one cash-on-cash returns from the 2024 cohort exceeded 40%, meeting the company’s year-two expectations ahead of schedule, while the 2023 class is trending above 50% returns. Liquidity also remains a source of strength, with $385.8 million in cash and investments and no outstanding debt, giving CAVA ample flexibility to fund expansion. These fundamentals provide a sturdy base for long-term growth, even as near-term comps remain volatile.

Menu innovation remains a key driver of guest engagement. Following a successful steak launch last year, CAVA is preparing to roll out chicken shawarma nationwide in the fall, alongside a limited-time cinnamon sugar pita chip offering. Salmon has also entered market testing, indicating further expansion of premium protein. These initiatives are designed to keep the brand top of mind with consumers while driving check growth and broadening appeal in an increasingly crowded fast-casual landscape.

The company’s disciplined expansion, robust new-unit performance and steady innovation cadence provide a strong platform for long-term growth. Still, discretionary headwinds and softer traffic trends present challenges, while newer markets likely test the durability of returns. With restaurant-level margins holding steady and a debt-free balance sheet providing financial flexibility, CAVA appears well-positioned to extend its growth trajectory.

Comparisons With Peers

Shake Shack Inc. SHAK continues to focus on operational enhancements and disciplined growth as it scales its global footprint. In the second quarter of 2025, Shake Shack reported average weekly sales of roughly $78,000 per unit, translating to annualized AUVs of about $4 million. Shake Shack’s comparable sales grew 1.8% year over year, driven by modest menu price increases and ongoing marketing activations, though traffic remained pressured. Management is guiding margin improvement through labor efficiencies, digital channel growth and reduced build costs, while emphasizing a balanced pace of new unit development.

Chipotle Mexican Grill, Inc. CMG remains the category benchmark, with systemwide AUVs above $3.5 million and a long-term goal of exceeding $4 million. In the second quarter of 2025, Chipotle posted a 4% decline in comparable sales as macro pressures weighed on consumer sentiment and value-oriented competitors captured incremental traffic. Management is responding with throughput initiatives, enhanced kitchen equipment and menu innovation, including the launch of Chipotle Honey Chicken and Adobo Ranch dips. Despite near-term softness, Chipotle continues to target mid-single-digit comps over the long term, supported by menu extensions, digital engagement and international expansion.

CAVA’s Price Performance, Valuation & Estimates

Shares of CAVA have declined 20.1% in the past three months compared with the industry’s fall of 3.9%.

CAVA Three-Month Price Performance

From a valuation standpoint, CAVA trades at a forward price-to-sales ratio of 5.6X, above the industry’s average of 3.78X.

The Zacks Consensus Estimate for CAVA’s 2025 and 2026 earnings per share (EPS) implies a year-over-year uptick of 33.3% and 18.8%, respectively. The EPS estimates for 2025 and 2026 have declined in the past 60 days.

CAVA stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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