Wall Street got its first taste of Cava’s (CAVA) future earnings potential.
In its first quarterly report since its initial public offering, the Mediterranean fast-food chain turned profitable, with revenue jumping 62.4% year-over-year and same-store sales, up 18.2%, in its second-quarter earnings results.
CAVA stock jumped more than 9% after the market closed on Tuesday.
Profitability is the main focus.
Last quarter, the company reported net income of $6.5 million. In all of fiscal 2021, the company posted a net loss of $37.4 million, which widened in 2022 to a net loss of $59 million.
“Revenue and profitability are at record levels,” Cava co-founder and CEO Brett Schulman said in the earnings release. “Our dominant leadership position and proven portability creates a meaningful opportunity for growth in new and existing markets, as evidenced by the opening of our 16 Net New CAVA restaurants during the quarter.”
Net sales: $172.9 million, up 27% year over year
Diluted EPS: $0.21
Same store sales: 18.2% increase
net income: $6.5 million
average unit size: $2.6 million
After its IPO, Cava stock closed at $43.30, valuing the restaurant chain at about $4.8 billion — nearly twice what the company priced at its valuation. the night before At $22 per share (total value of $2.5 billion).
The IPO was widely seen as a pioneer for other startups looking to the public market.
In mid-July, analysts began covering the stock with high hopes about its long-term potential and some comparisons to competitor Chipotle (CMG).
In the second quarter, Cava saw same-store sales grow 18.2% year-over-year, surpassing Chipotle’s same-store sales growth of 7.4% in the second quarter. Sales were boosted by a 10% increase in guest traffic and a 7.9% increase in menu prices and product mix. In the first quarter of 2023, Cava sales increased by 28.4%.
What else we’re watching: New restaurant opening
Cava said in its S-1 filing that it plans to use the proceeds to open new restaurants and for general corporate purposes.
Already, the fast-casual chain appears to be putting some of that cash to use, adding 16 new restaurants in the quarter. As of the end of the second quarter, there are now 279 Cava restaurants.
The chain opened its first fast casual concept in 2011. Since it acquired the Mediterranean fast food chain Zoes Kitchen for $300 million in August 2018successfully converted 145 Zoes Kitchen locations to the Cava brand.
Over the rest of 2023, it plans to open 34 to 44 new Cava sites and open another eight converted Zoes sites (the remainder of the sites). By 2032, the company said it plans to operate 1,000 locations in the United States.
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Brooke DiPalma is a correspondent at Yahoo Finance. Follow her on Twitter at @BrookeDiPalma Or email her at firstname.lastname@example.org.
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