Is CAVA's Store Expansion Strategy Built for Long-Term Efficiency?

CAVA Group CAVA is leaving no stone unturned to expand its footprint. The company continues to prove that the Mediterranean-forward fast-casual model is more than a trend, it is a scalable, high-return growth strategy.

In first-quarter 2025, the company opened 15 net new restaurants, expanding its total footprint to 382 locations, a year-over-year increase of 18.3%. In 2025, it expects to open 64-68 net new CAVA restaurants. The company remains on track to reach at least 1,000 restaurants by 2032.

What makes this expansion particularly noteworthy is its efficiency and resilience. New stores are exceeding expectations on both sales and margin performance. In first-quarter 2025, restaurant-level profit increased 27.4% year over year. On the other hand, mature locations continue to demonstrate strong average unit volumes (AUVs), with top-quartile stores delivering AUVs above $4 million and margins of more than 30%.

CAVA is also investing in operational enhancements to ensure quality scales with growth. Its Connected Kitchen initiative, featuring AI-assisted prep and kitchen display systems, is driving improved guest satisfaction and throughput. The labor deployment model is optimizing team productivity, while its Project Soul design upgrades aim to deepen customer connection in-store.

Despite macroeconomic uncertainty, the company continues to impress investors with its robust same-restaurant sales, which indicate that demand remains strong even as expansion accelerates. In first-quarter 2025, the company’s same-restaurant sales increased 10.8%, driven by a 7.5% gain in traffic. 

By combining disciplined store rollouts, strong unit economics and operational innovation, CAVA’s expansion appears well-structured for long-term efficiency and potentially long-term outperformance.

Other Restaurant Operators' Expansion Efforts

Chipotle Mexican Grill, Inc. CMG and Sweetgreen, Inc. SG are also focusing on expansion efforts.

Chipotle’s strength in new restaurant openings aided its performance in the first quarter. In the reported quarter, Chipotle opened 57 new restaurants in 48 locations, including a Chipotlane. The company remains on track to open between 315 and 345 new locations this year, with approximately 80% featuring a Chipotlane. This includes 15 to 20 new restaurants in Canada.

In first-quarter 2025, Sweetgreen reported the opening of 5 net new restaurants.  In 2025, Sweetgreen expects to open at least 40 net new restaurants.

CAVA’s Price Performance, Valuation and Estimates

CAVA’s shares have lost 0.7% in the past three months compared with the industry’s decline of 3%.

Price Performance

Despite its recent decline, CAVA is priced at a premium relative to its industry, with a forward 12-month price-to-sales ratio of 7.26, which is above the industry average.  

P/S (F12M)

The Zacks Consensus Estimate for earnings per share has seen upward revisions. In the past 30 days, analysts have increased their estimates for the current year by 5.5% to 58 cents per share, indicating year-over-year growth of 38.1%.
 

The 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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