Mediterranean restaurant chain Cava Group (CAVA) has made quite a name for itself in a comparatively short amount of time and during a period when other restaurants are struggling. Even McDonalds (MCD) is feeling the strain right now. Nevertheless, Cava Group is up over 22% in Friday afternoon’s trading thanks to its recent second-quarter results and positive forward outlook.
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Cava Group delivered in a big way. Same-store sales were up 14.4%, and the company expects a 9.5% rise this year. That is actually up substantially from the original projections of just a 6.5% jump.
Jon Tower, a five-star analyst with Citi, offered commentary on how Cava is managing to buck a trend that is taking several restaurants down with it. Essentially, the firm is offering an experience that cannot be replicated readily by home chefs. That makes it particularly valuable for consumers, who have to go to Cava to get the combination of wraps and salads that Cava specializes in.
Steak Is Driving New Interest
One of Cava’s latest additions to the menu is being hailed as a major reason for its increased success. The recent launch of steak options at Cava, particularly the Steak & Feta Pita, is driving a lot of new interest. Though steak has been on the menu since June, that comes at right about the same time that its major surge hit.
Moreover, Cava’s CEO Brett Schulman noted that there are likely more advances to come. In fact, the company is “working on a deep pipeline of innovation” that will cover the next few years. That by itself is intriguing; its specialties are basically salads and pitas. How far can that possibly be innovated? Still, by producing any kind of innovation in a field that has long been thought to have been conquered could attract the curious.
Is CAVA Stock a Buy or Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on CAVA stock based on seven Buys and six Holds assigned in the past three months, as indicated by the graphic below. After a 191% rally in its share price over the past year, the average CAVA price target of $91.69 per share implies 26.05% downside risk.
