CAVA Group, Inc. (CAVA) Earnings

Management highlights

• **Brand & Strategic Positioning** - CAVA is the clear scaled leader in fast-casual Mediterranean cuisine, aligned with durable consumer shifts toward fresh, flavorful, protein-rich healthy meals - New restaurant openings consistently outperform expectations, with productivity above 100%, demonstrating broad national brand appeal and concept portability across new and existing markets - Long-term growth strategy is organized around three core pillars: national expansion, deepened guest relationships, and consistent operational excellence across all locations • **National Expansion Updates** - Q2 2026 brought entry into new markets including Indiana and Ohio; upcoming expansion includes entry to Las Vegas, Nevada in H2 2026 and the Bay Area in 2027 - The 2024 cohort of new restaurants is the highest performing vintage in the company's portfolio, delivering double-digit same-restaurant sales, and management expects 2025 and 2026 cohorts to follow this trend • **Culinary Innovation** - Nationwide launch of pomegranate glazed salmon, the brand's first permanent seafood offering, met performance expectations, increased new customer acquisition, and boosted frequency among loyalty program guests. Salmon will remain on the menu through the end of 2026 - Market testing of roasted garlic shrimp is complete, and the product is moving through the company's disciplined stage-gate development process for potential future launch - Smaller seasonal limited-time offerings (including Harissa BBQ pita chips and a seasonal strawberry ginger drink) drive repeat guest visits and reinforce brand relevance • **Guest Engagement & Loyalty** - Continued growth of the first-party loyalty platform; new in-app Flavor Passport experience encourages menu exploration and reward earning to deepen guest connections - Off-platform experiential activations, such as the Mediterranean Summer Supper Series in partnership with Airbnb Experiences, drive organic earned social media engagement and deepen relationships with top loyalty members • **Operational & People Investments** - Launched the Flavor Your Future team member development platform, with a goal to hire over 2,500 new team members and build an internal leadership pipeline to support long-term growth - The Area General Manager (AGM) role has been rolled out to 70% of the restaurant fleet, with initial results showing improved team member satisfaction, guest satisfaction, and faster service speed - National rollout of pre-marinated chicken will continue through 2026 and 2027, simplifying back-of-house prep, improving flavor consistency, and reducing team workload, freeing time for guest-focused hospitality - CAVACore and CavaCurrent data and operational infrastructure investments are already driving significant productivity gains for corporate support teams, with long-term plans to extend these tools to restaurants for predictive scheduling, inventory management, and personalized marketing • **Food Safety Response** - CAVA does not source leafy greens from Mexico, does not serve iceberg lettuce, and does not source from the farms linked to the recent salmonella outbreak, so it has not been directly impacted by recent industry-wide food safety events - The company maintains an external Food Safety Advisory Council and full supply chain traceability to the lot code level, and continues to monitor industry developments to proactively improve its own protocols

Guidance

• Management maintained its full-year 2026 guidance, with no upward or downward revisions, incorporating the near-term cyclospora-related sales impact and prudent assumptions for remaining macroeconomic and geopolitical uncertainty - Full-year net new restaurant openings: 75 to 77 units - Full-year same-restaurant sales growth: 4.5% to 6.5%; guidance ranges from slightly negative same-restaurant sales at the low end of the range to mid-single digit growth at the high end, with current trends indicating no expectation of landing at the low end - Full-year CAVA restaurant-level profit margin: 23.7% to 24.3%: the range incorporates expected incremental costs from fuel surcharges, partial pre-marinated chicken rollout, and ongoing team member wage investments - Full-year pre-opening costs: $22 million to $22.5 million - Full-year adjusted EBITDA (including pre-opening cost burden): $181 million to $191 million - Full-year equity-based compensation: expected to remain in the $22 million to $24 million range - Full-year effective tax rate: expected to remain between 23% and 28%, with a higher rate in H2 2026 due to timing of equity-based compensation • Fourth quarter seasonality is expected to follow historical trends, with restaurant-level margins roughly 300 basis points lower than Q3 levels • General and administrative spending is expected to increase in Q3 and Q4 2026 compared to Q2, for targeted growth investments

Segment performance

CAVA operates as a single restaurant segment for this reporting period. Total revenue in Q2 2026 grew 31.3% YoY to $365.4 million. Same-restaurant sales increased 9% YoY, driven by 5.3% traffic growth. The company opened 17 net new restaurants, ending the quarter with 476 total locations, a 19.6% YoY increase. System-wide average unit volumes are currently $3.1 million, with new restaurant productivity exceeding 100% of expectations. CAVA restaurant-level profit was $93.8 million, representing 25.7% of total revenue, a 28.1% YoY increase from $73.3 million (26.3% of revenue) in Q2 2025. Food, beverage, and packaging costs were 30% of revenue, up 50 basis points YoY, driven primarily by input costs for the new salmon product launch, partially offset by favorable product mix. Labor and related costs were 25.3% of revenue, up 30 basis points YoY, driven by a 3% incremental wage increase for team members, partially offset by sales leverage. Occupancy and related expenses were 6.3% of revenue, a 50 basis point improvement YoY due to sales leverage. Other operating expenses were 12.8% of revenue, up 40 basis points YoY, driven by a higher mix of third-party delivery. General and administrative expenses (excluding equity-based compensation) were 9.3% of revenue, down 50 basis points YoY, due to sales leverage and timing of performance-based incentives, partially offset by growth-related investments. Pre-opening expenses were $6.7 million, up $1.6 million YoY, due to more units under construction and increased opening investments to support higher volume. Adjusted EBITDA was $54.7 million, a 30% YoY increase. Net income was $23 million, or $0.19 diluted EPS, up from $18.4 million, or $0.16 diluted EPS, in Q2 2025. Year-to-date 2026 operating cash flow was $134.5 million, and year-to-date free cash flow was $44.8 million, marking the 10th consecutive quarter of positive year-to-date free cash flow. As of quarter-end, the company had $435.6 million in cash and investments, zero debt outstanding, and a $150 million undrawn revolving credit facility.

Risks & headwinds

• Near-term same-restaurant sales faced temporary pressure from broad industry consumer concerns around fresh produce safety tied to the 2026 cyclospora outbreak, even though CAVA was not directly impacted • Macroeconomic and geopolitical uncertainty creates near-term visibility challenges for consumer spending trends • Ongoing input cost pressure, including fuel surcharges and wage investments, puts pressure on near-term margins • Expansion growth is constrained by the size of the internal leadership pipeline, requiring ongoing investment to build the talent pool needed for accelerated growth • The company faces food safety risk inherent to the restaurant industry, even with proactive protocols in place

Analyst Q&A

• Q: Dennis Geiger (UBS) asked for additional color on the H2 2026 outlook, specifically whether the cyclospora-related food safety concerns are mostly behind the business, and what drives the range of the same-restaurant sales guidance. /

  A: Management noted that guidance already incorporates observed impacts to date, plus prudent assumptions around the duration of any remaining cyclospora pressure and broader macro uncertainty. The low end of the guidance range implies slightly negative same-restaurant sales, while the high end implies mid-single-digit growth. Management emphasized that current trends do not point to landing at the low end of the range, but prudence justified maintaining the original full guidance range. (337 words)

• Q: Andrew Charles (TD Cowen) asked what levers CAVA could pull, such as increasing marketing spend, to reverse the temporary cyclospora-related sales slowdown and return to prior growth trends. /

  A: Management noted that low current marketing spend (around 1% of revenue, among the lowest in the industry) does leave room to increase marketing if needed, but the most impactful lever remains delivering consistent, high-quality guest experiences in every restaurant every day. Strong in-restaurant execution, including clean spaces, welcoming hospitality, and consistent fresh food, is the core driver of sustained traffic growth. (253 words)

• Q: Danilo Gargiulo (Bernstein) asked whether centralizing prep via pre-marinated chicken will lead to longer-term labor cost savings, and what other centralization opportunities exist for the menu. /

  A: Management stated that the primary goal of pre-marinated chicken is not to cut labor hours, but to free up time that team currently spend on manual prep to re-invest that time in guest hospitality and in-restaurant experiences. The company believes this reallocation of labor will drive more durable long-term traffic growth than direct cost cutting. (201 words)

• Q: Logan Reich (RBC Capital Markets) asked for an update on income cohort growth trends after management previously noted faster growth in lower-income cohorts. /

  A: Management confirmed that the trend of faster same-restaurant sales growth in lower-income median household markets continues. This demonstrates that CAVA's strategy of holding the line on price increases during a period of industry-wide inflation has improved accessibility for consumers across income levels, supporting a broader national growth opportunity. (160 words)