TenQ

The CAVA story

CAVA runs a Mediterranean fast-casual restaurant chain, with expansion hinging on whether new locations and growing guest traffic can sustain profits as salmon, delivery and wages raise costs.

Written from CAVA's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $51.58share price, last close
  • $6.0Bmarket value
  • 15/36TenQ Score checks passed
  • 39.5%growth a year the price assumes

The story in brief

  • Expansion meets stronger traffic. In the quarter to July 2026, CAVA opened 17 net new restaurants and increased same restaurant sales 9.0%, including guest traffic growth of 5.3%.
  • More profit, thinner margins. Restaurant-level profit grew 28.1% to $93.8 million in the quarter to July 2026, while its margin fell 60 basis points to 25.7%.
  • Cash expectations run ahead. The reverse DCF implies free cash flow after stock pay grows 39.5% a year for ten years, against a delivered rate of -5.6% over the last twelve months.

What drives the business

  • CAVA's expansion strategy centers on customizable Mediterranean bowls and pitas, with management seeing an opportunity for more than 1,000 restaurants in the United States by 2032.
  • The company centrally produces dips, spreads and certain dressing bases for its restaurants, also distributes products through grocery stores, and sources through more than 50 grower, rancher and producer partners.
  • In the quarter to July 2026, the restaurant count reached 476, a 19.6% increase from a year earlier, while CAVA restaurant revenue grew 31.3% to $365.4 million.
  • Same restaurant sales growth of 9.0% combined guest traffic growth of 5.3% with a 3.7% contribution from menu price and product mix in the quarter to July 2026.
  • Separate digital preparation lines support restaurant throughput, and digital orders accounted for 39.0% of CAVA revenue in the quarter to July 2026.

What the price assumes

At $51.58, the reverse DCF implies free cash flow after stock pay grows 39.5% a year for ten years, using a 10.2% discount rate.

The delivered annual growth rate for that cash measure was -5.6% over the last twelve months, despite revenue growth of 26.8%.

The TenQ check sets a -0.8% growth bar by moving the historical rate halfway toward 4%, leaving the price assumption well above that benchmark.

Value CAVA on your own assumptions

What could change the story

  • Pomegranate Glazed Salmon, a higher third-party delivery mix and wage investments pressured restaurant-level margins in the quarter to July 2026, although salmon and delivery increased profit dollars.
  • Expansion depends on finding suitable leased sites and staffing new restaurants, which may not become profitable and may divert sales from existing locations.
  • The operating margin of 5.2% trails the TenQ sector benchmark of 9.8%, while return on equity of 8.4% falls short of its 16.0% benchmark.
  • Free cash flow was $49 million over the last twelve months before accounting for $19 million of stock-based pay, making cash generation after compensation an important distinction from restaurant-level profit.

What to watch next

  • CAVA reaffirmed fiscal 2026 guidance for 75 to 77 net new restaurant openings and same restaurant sales growth of 4.5% to 6.5%.
  • Its fiscal 2026 outlook also calls for a restaurant-level profit margin of 23.7% to 24.3% and adjusted EBITDA of $181.0 to $191.0 million.
  • The next releases will show whether guest traffic remains the larger contributor to same restaurant sales growth and whether higher profit dollars continue to offset pressure on the margin rate.
  • Following the September 2026 authorization for up to $100 million of share repurchases, actual spending and cash remaining after restaurant investment will show how CAVA balances expansion with shareholder returns, since the authorization requires no purchases.

Sources

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