Will Macroeconomic Headwinds Derail CAVA's Traffic Gains?

CAVA Group CAVA has impressed investors with solid traffic growth, defying broader economic uncertainty. In first-quarter 2025, the company reported a robust 7.5% traffic increase, fueling same-restaurant sales growth of 10.8%. 

The company’s premium offerings, such as steak and pita chips, continue to see strong attachment rates across income levels, suggesting that customers still value the brand's Mediterranean-inspired menu, even amid financial strain. Additionally, CAVA’s performance remained consistent across all geographies and dayparts, with no signs of regional weakness, including in the lunchtime segment where some peers have seen softness.

But now the question is, can this momentum withstand mounting macroeconomic pressures? According to management, there is little indication that consumers are pulling back. Across income levels, geographies and dayparts, traffic remains positive, with even low-income segments outperforming expectations. Premium add-ons like steak and pita chips are seeing strong uptake, reinforcing the brand’s value proposition in a challenged consumer environment.

Still, CAVA is not ignoring economic uncertainty. The company maintained a full-year guidance, projecting 6-8% same-restaurant sales growth, moderating from the high of first-quarter 2025. Notably, CAVA has opted not to raise prices further despite inflation, aiming to preserve customer loyalty.

Efforts to offset cost pressures include productivity improvements through new labor models and a wider rollout of digital tools like the Kitchen Display System. These initiatives, combined with disciplined expansion and a resilient unit economic model, support sustained traffic even in a volatile environment.

While macro headwinds may persist, CAVA appears well-positioned to maintain traffic growth through strategic pricing, guest engagement and operational excellence, making it one of the few restaurant names that could remain insulated from broader economic softening.

How CAVA's Traffic Stacks Up Against CMG & SG

Chipotle Mexican Grill CMG remains confident in its ability to maintain strong customer traffic, even in competitive environments. Looking ahead, management expects Chipotle’s comps to remain positive through the end of the second quarter, with same-store sales in the mid to high single-digit range. While Chipotle’s traffic is anticipated to be roughly flat by quarter-end, the brand's performance continues to outpace many peers in the fast-casual space.

Sweetgreen SG has experienced softer April sales, particularly in key urban markets like New York, Boston and Los Angeles, reflecting broader consumer caution. Despite this, Sweetgreen remains optimistic about regaining traffic momentum through innovation. Sweetgreen believes it has strong tools in place to boost guest frequency and stabilize traffic in the months to come.

CAVA’s Price Performance, Valuation and Estimates

CAVA’s shares have lost 36.4% in the past six months against the industry’s rise of 0.6%.

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 6.57, 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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