管理層發言
Hello everyone. Thank you for joining us and welcome to CAVA Q1 26 earnings call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, please press *1 again. I will now hand the conference over to Matt Milanovich, SVP of Finance. Please go ahead.
Good afternoon, and welcome to CAVA's first quarter 26 financial results conference call. Before we begin, if you do not already have a copy, the earnings release and related 8-K furnished to the SEC are available on our website at investor.cava.com. The purpose of this conference call is to give investors further details regarding the company's financial results, as well as a general update on the company's progress. You will find reconciliations of any non-GAAP financial measure discussed on today's call to the most directly comparable financial measure calculated in accordance with GAAP to the extent available without unreasonable efforts in today's earnings release and supplemental deck, each of which is posted on the company's website. Before we begin, let me remind everyone that this call will contain forward-looking statements. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Investors should be aware that any forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in CAVA's most recent annual report on Form 10-K, as may be updated by its reports on Form 10-Q and other filings with the SEC. Please refer to these filings for a more detailed discussion of forward-looking statements and the risks and uncertainties of such statements. All forward-looking statements are made as of today, and except as required by law, CAVA undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise. And now I will turn the call over to the company's Co-Founder and CEO, Brett Schulman.
Thanks, Matt, and welcome to the call, everyone. In 2026, we further solidified our position as the clear leader in the Mediterranean cuisine category while executing against our long-term strategy with discipline and conviction. Despite today's broader macroeconomic environment and geopolitical uncertainty, we sustained strong momentum and delivered exceptional results, including positive traffic of 6.8%. Guided by the same steady focus that has shaped our business for the past 15 years, we will continue building for the long term as we gain market share with significant white space ahead while deepening our relationships with guests through a value proposition that clearly resonates. Our first quarter highlights include a 32.2% increase in CAVA revenue, same-restaurant sales of 9.7% driven by 6.8% traffic, 20 net new restaurants, ending the quarter with 459 restaurants, a 20.2% increase year over year, adjusted EBITDA of $61.7 million, a 37.6% increase over 2025, net income of $23.6 million, and $15.5 million in free cash flow. These results are a direct byproduct of the structural strength of our business and the dominant position we hold as the industry leader in Mediterranean cuisine — a category we have pioneered, defined, and continue to shape. Central to that leadership is a value proposition rooted first and foremost in doing what is right by our team members and our guests. While many peers have responded to short-term cyclical pressures with discounting and promotional activity, we have remained unwavering on our long-term strategy. This past January, we took an approximate 1.4% price increase while holding bowl and pita pricing flat. Over the longer term, we have priced well below inflation, with price adjustments representing only slightly more than half of cumulative CPI since 2019. These decisions, deliberate and consistent, have compounded over time, reinforcing the trust we have built with our guests and strengthening the foundation of our brand. Importantly, that value is not one-dimensional. Whether a guest is looking for an accessible everyday meal or choosing to lean into one of our more premium offerings, we have created the flexibility for them to engage with CAVA on their terms in a way that fits their needs and moments. Ultimately, this all ties back to our concept essence: making Mediterranean cuisine accessible to communities across the country while delivering it with warm hospitality. Hospitality that is delivered by our outstanding team members whom we support with investments like our Flavor Your Future platform, which I will speak to in more detail later. The strength of our category, the competitive positioning of our brand, and the power of our concept have enabled the success we saw this past quarter that we continue to build on for the future. It is that foundation and focus on execution that guides our work across our four strategic pillars. Beginning with our first: expand our Mediterranean way in communities across the country. During the first quarter, we opened 20 net new restaurants, ending the quarter with 459 locations across 29 states and the District of Columbia. Our expansion continues with both intention and incredible momentum, reflected by recent new market openings in Cincinnati, St. Louis, Columbus, and our upcoming entry into Minneapolis, Minnesota later this year, further deepening our presence across the Midwest. We are encouraged by the early performance of our 2026 cohort; it's tracking in line with or ahead of the strength of our 2025 class, with first-quarter new restaurant productivity trending above 100%. As we expand our reach across the country, our culinary innovation remains at the heart of what draws guests to our brand. This past January, we brought back our fan-favorite roasted white sweet potato to a warm reception, with guests embracing it as a complimentary protein and using it as a canvas to craft their own CAVA experience. The launch resonated beyond our existing customer base as well, driving increased visit frequency among returning guests while introducing the brand to new ones. We are pleased with the performance of the seasonal favorite, and we look forward to welcoming it back to our menu again in the future. From beloved returning favorites to new culinary firsts, our pipeline of innovation continues to move forward with discipline and purpose. I am excited to share that we have officially launched our first-ever seafood offering — pomegranate-glazed salmon — across all restaurants nationwide. Our roasted, flaky fillet is marinated in a subtly sweet blend of pomegranate date molasses, harissa, red wine vinegar, and bold spices. A protein-rich option with omega-3s and essential vitamins like B12 and vitamin D delivering both bold flavor and genuine nourishment in every bite. Salmon is a natural extension of our menu, fitting seamlessly within the Mediterranean diet while increasing the variety of choices we can offer our guests. This is an important culinary milestone for us and one we approached with care, ensuring it stayed true to our concept essence. We have seen promising early results as guests experience salmon for the first time at their local CAVA. Shifting to our second pillar — deepen personal relationships with guests even as we scale — we are encouraged by the strength of our loyalty program and the increasingly creative and engaging ways we are bringing it to life for our guests. This past quarter, through our digital experience, we leaned into the cultural touch points that bring our guests together, finding intersections of joy, connection, and food that feel organic to who we are. Our flavor bracket in-app game and recent partnerships with WNBA #1 pick A'ja Wilson (AZ Fudd was referenced in the remarks as a collaboration) and NCAA men's champion Donovan Clingan, each with their own digital-exclusive bowl, brought the energy of March Madness to life in a way that felt both timely and uniquely CAVA. Together, these became one of our most highly engaged digital experiences to date, and we will continue to broaden our array of engagement tools and tactics like these and further leverage the loyalty program and first-party audience we are growing. From the beginning, it has always been about showing up authentically and becoming a genuine part of what our guests already love. It is through this kind of presence that we continue to deepen the relationships that keep our guests delighted and coming back. Bringing these relationships to life starts at a fundamental level with our people and our restaurants, which is reflected in the progress across our third and fourth pillars: run great restaurants every location, every shift, and operate as a high-performing team. Operating as a high-performing team requires making foundational investments today that position us for the next decade and beyond. We have spoken before about being on the precipice of a decade of data transformation — a multiyear transformation where data, technology, and AI will reshape how we run our business. I want to take a moment to share the recent progress we have made. Earlier this year, we reached a meaningful milestone with the launch of CavaCore, our modern data platform. It establishes a unified, scalable foundation for how we manage and use data across the business, enabling fast execution today while positioning us to leverage emerging AI capabilities. Building on that, we are in the early stages of delivering our new edge-enabled operating platform, CavaCurrent, a modular real-time commerce platform. CavaCurrent is live today, actively processing orders across our restaurants, and as it scales, it will drive more consistent execution with improved visibility and faster, more localized actions. Together, CavaCore and CavaCurrent create a connected real-time system bringing data, applications, and intelligence together to power our business. This enables us to deliver more meaningful personalized experiences for our guests, tailored to their preferences and behaviors, while also advancing more predictive operations that help our teams anticipate demand and better align staffing and preparation in real time. By building this platform internally, we gain greater control, flexibility, and the ability to scale more efficiently over time. And while this is an important advancement, it is not a discrete initiative. It is a deliberate structural evolution creating the conditions for us to operate as a real-time AI-enabled business and move faster and more intelligently across every part of our organization. The work we are doing today will allow us to continue delivering value for our guests, our team members, and our business for years to come. Finally, even the most sophisticated infrastructure only creates value when it is in service of the team members running great restaurants every location, every shift. A core tenet of this strategic pillar is investing in our team members and talent, and we remain deeply committed to building the next generation of leaders across our system. Our Flavor Your Future initiative continues to show promise, focusing on attracting, developing, and retaining talent across the organization. A recent key action under this was the launch of our new assistant general manager position with the critical goal of developing a deeper bench of role-ready leaders to support our growth as we scale. Early indicators from the AGM rollout are promising. Restaurants with AGM coverage are outperforming those without, as AGMs provide additional leadership support during peak dinner and weekend shifts, strengthening operations, deepening the development of future team members, and building more sustainable restaurant teams over time. We look forward to sharing more on the broader Flavor Your Future platform in the quarters ahead. And while the early results of the AGM rollout are encouraging, stories like Adriana Cervantes reflect the broader opportunity we are building toward through Flavor Your Future. Adriana joined CAVA as a Guest Experience Manager in Sherman Oaks and through her leadership, operational impact, and commitment to our values, quickly progressed into the assistant general manager role before being promoted to general manager earlier this year. Today, she is already working toward becoming an academy manager, helping develop future leaders across the organization. Her journey is a powerful reminder that when we invest in our team members and create opportunities for growth, we are able to build not just stronger restaurants, but meaningful and lasting careers for our people. Before I turn the call over, I want to thank our teams across the country for delivering a strong quarter and for staying true to our mission. It is the consistency, intentionality, and discipline with which we operate that have allowed us to establish ourselves as a clear leader in Mediterranean — the next large-scale cultural cuisine category. As we look ahead, we remain committed to bringing heart, health, and humanity to food. And with that, I will hand it over to Tricia to walk you through the financials.
Thanks, Brett, and hello, everyone. CAVA revenue in 2026 grew 32.2% year-over-year to $434.4 million. Same-restaurant sales increased 9.7% driven by traffic growth of 6.8%. During the quarter, we opened 20 net new restaurants, bringing our total CAVA restaurant count to 459. As Brett noted, we are very pleased with our new restaurant openings, which are tracking ahead of or in line with the strength of our 2025 class. New restaurant openings continue to exceed expectations in both top line and margin performance, with new restaurant productivity above 100%. Our overall system-wide average unit volume is now $3 million. CAVA restaurant-level profit in the first quarter was $108.9 million or 25.1% of revenue, compared to $82.3 million or 25.1% of revenue in the prior-year period, representing a 32.3% increase. Adjusted EBITDA margin was 29.1% of revenue over 2025, up by 20 basis points, largely driven by favorable mix. As a reminder, we anticipate CAVA's food, beverage, and packaging costs to increase as a percent of revenue for the rest of the year as a result of the recent salmon launch. CAVA flavor and related costs were 25.7% of revenue, approximately flat to 2025. This was driven by sales leverage, offset by a 2% investment in team member wages which includes the expansion of our AGM role. CAVA occupancy and related expenses were 6.9% of revenue, an improvement of 50 basis points from 2025 due to sales leverage. Other operating expenses were 13.3% of revenue, reflecting an increase of 80 basis points from 2025. This increase was primarily driven by a higher mix of third-party delivery and other individually significant items. Shifting to overall performance, our general and administrative expenses for the quarter, excluding equity-based compensation and executive transition costs, were 9.9% of revenue compared with 10.5% of revenue in 2025. This 60-basis-point improvement was driven by leverage from higher sales, partially offset by investments to drive future growth and higher performance-based incentive compensation. Preopening expenses were $6.2 million in the current quarter, compared with $4.5 million in the prior-year quarter. The $1.7 million increase includes a higher number of units under construction. Adjusted EBITDA for the first quarter was $61.7 million, a 37.6% increase versus 2025. The increase in adjusted EBITDA was driven by 9.7% same-restaurant sales growth, the number and continued strength of new restaurant openings, partially offset by investments to support growth including higher preopening costs. For 2026, equity-based compensation was $7.7 million. We continue to expect equity-based compensation, which includes our new programs to provide equity grants to GMs and performance-based long-term incentives, to be between $22 million and $24 million in aggregate for the full year. In the first quarter, our effective tax rate was 21.5%. For the full year fiscal 26, we expect our effective tax rate to be between 23% to 28% with the rate in Q2 being consistent with Q1 based on the timing of equity-based vesting. As a reminder, the increase in our tax rate in 2026 versus the prior year is due to the lower permanent benefit from equity-based compensation. Our cash taxes will continue to be immaterial until we fully utilize our net operating losses. During the first quarter, we reported $23.6 million of net income compared to $25.7 million of net income in 2025. Diluted EPS was $0.20 in the first quarter compared with $0.22 in 2025. The decrease in net income and diluted EPS is due to the previously mentioned higher permanent benefit from equity-based compensation within income tax in the prior year, partially offset by nearly 50% higher earnings before taxes. Turning to liquidity, at the end of the quarter, we had zero debt outstanding, $403 million in cash and investments, and access to a $150 million revolver with an option to increase our liquidity if needed. Cash flow from operations for 2026 was $64.1 million compared to $38.6 million during 2025. Free cash flow during the quarter was $15.5 million. Now to our outlook for full year 2026. We are raising our guidance to expect the following: 75 to 77 net new CAVA restaurant openings, same-restaurant sales of 4.5% to 6.5%, restaurant-level profit margin of 23.7% to 24.3%, preopening costs between $22 million and $22.5 million, and adjusted EBITDA, including the burden of preopening costs, between $181 million and $191 million. I would like to provide some additional thoughts on our outlook. Turning to same-restaurant sales, we increased our full-year outlook to 4.5% to 6.5% growth. Our updated guidance reflects the continued strength we are seeing across the business while remaining appropriately balanced against the current macroeconomic and consumer backdrop. We remain confident in the underlying health of the business, supported by the strength of our unit economic model. While same-restaurant sales trends in the second quarter are in line with the first quarter and tracking above our revised full-year guidance, our updated outlook contemplates a more moderate mid-single-digit comp assumption for the balance of the year. Overall, we believe our guidance appropriately balances the momentum we are seeing in the business today with a prudent view of the external environment. Shifting to restaurant-level margin, our outlook reflects the strength of our business and incorporates a 20- to 40-basis-point headwind to capture a more cautious view on elevated energy cost impacts given ongoing geopolitical uncertainty. On the labor front, our guidance embeds further investments in team member wages and other opportunities to deliver on an exceptional guest experience. As a reminder, beginning in the second quarter, we introduced salmon nationally, which we expect to be a margin rate headwind of approximately 100 basis points. Preopening expenses reflect increased investments in operator readiness including onboarding general managers earlier to allow for more comprehensive training ahead of opening. We believe these investments help position our teams to execute consistently at a high level. Finally, shifting to general and administrative expenses: while we experienced leverage in the quarter driven by outsized sales performance, our general and administrative outlook for 2026 remains unchanged, and we continue to expect G&A as a percentage of revenue to be relatively flat year over year as we remain committed to making targeted investments to support the long-term growth of the business. Before we open the line for questions, I want to thank our team members across the organization for their continued hard work and commitment to delivering for our guests every day. It is because of their passion and dedication that we are able to fulfill our mission of bringing heart, health, and humanity to food and create meaningful experiences for our guests. With that, we will open the line for questions.
分析師問答
We will now begin the question-and-answer session. Please limit yourself to one question. To ask a follow-up, please rejoin the queue. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, please press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Sara Senatore from Bank of America. Sara, your line is now open.
Thank you. Just, I guess, a question about the new store productivity. Obviously, very — yeah, very impressive. I think, you know, in the past, we have talked about a honeymoon period; it has been a relatively modest drag. So I do not want to overstate it. I think maybe 100 basis points. But I guess anything you can share about the new stores, any commonalities across which markets have the highest AUVs? You know, and based on a 2025 cohort, are those highest volume stores the ones that have the honeymoon period, or are those two things, I guess, not correlated? Just trying to think through, you know, as we think through, as they enter the comp base. And then just a quick clarification — you said, I think, CAVA's food, beverage and packaging costs will increase for the rest of the year because of salmon. So does that mean you plan to keep it on the menu through the end of the year? I guess I thought initially it was targeted through Q3. Thank you.
Thank you for the question. So talking about new store productivity first, we are very pleased with the openings of our new restaurants again in 2026. Our new restaurant openings are exceeding our expectations with AUVs of $3 million and performing at 100% or greater productivity. We are finding that across all geographies, all types of formats, and all markets, and cannot find any commonalities or trends tying them to a particular behavior overall, other than we have not found a market yet that does not love CAVA, and we are very happy with their performance. What we are seeing with those 2024 openings as they come into 2026 — while we talked about the honeymoon last year — is that they are outpacing our expectations and that they are performing better than we expected. After 18 months they continue to show positive momentum and are contributing significantly to overall same-restaurant sales performance. The 2025 vintage in 2026 is performing very similarly to 2024, so no significant difference there. We would expect them to perform similarly as we move forward, and that is how we have reflected it in our guidance. Your second question was regarding the impact of salmon. So yes, we launched salmon at the beginning of the second quarter. It is anticipated to run in the second quarter and third quarter, and our guidance reflects that impact in the fourth quarter as well.
Thank you for your question. Your next question comes from the line of David Tarantino from Baird. David, we are just opening your line. It is now open.
Brett, thank you. My question is on the margin outlook. Tricia, you raised the comp guidance, which is encouraging, but did not really touch the restaurant-level margin guidance very much. And I think you called out energy costs, but I guess are there other factors that are limiting the flow-through on the additional revenue that are worth calling out, or is this all about an assumption that energy costs will be higher for the balance of the year? And then secondly, I wonder if you could just comment specifically on the other operating cost line because I think that line surprised, at least some of us, this quarter, and just if we can unpack the fairly big variance in that line versus maybe where we had it modeled? Thanks.
Appreciate that, David. So regarding the margin outlook, our model is incredibly robust and has tremendous flow-through, and we are seeing that continue to perform. But there are a number of factors that we included in our guidance that we want to specifically touch on. One is salmon, so that is certainly going to have an impact overall on margin rates. But remember that salmon is priced to be penny-profit neutral, so the dollars will be the same. The other piece is the energy cost impact — it hits a couple of different line items. As we called out in the prepared remarks, we are contemplating an additional 20 to 40 basis points of an impact related to those costs that would likely be more significant in the third and fourth quarter as fuel surcharges kick in. We are starting to see early signs of that, and if this persists, it will continue to escalate as you go into the remainder of the year. You are also going to see some potential utility impacts on other operating expense lines. Within input costs related to food, beverage, and packaging, you have polyethylene costs that are anticipated to also be impacted, and we have built all that into our guidance, which does have an impact on the overall flow-through. To a lesser extent, we did layer in some average wage investments and some flexibility to make some investments in our guest experience in terms of labor that will be less impactful but are included in our guidance overall. And keep in mind, David, we did increase the top end of our restaurant-level margin guidance range by 10 basis points, going back to the robustness of the model itself, but contemplating the uncertainties that are out there and how they might impact our performance overall. The other OpEx line, as we called out, digital mix is impacting that, so you are seeing some increase in overall fees on that line. Digital is designed to drive profit neutrality, so it is a little bit of an optical impact as you look at that. Then there are other fairly immaterial amounts across a number of different categories, but between other operating expenses, those are fairly one-time in nature. However, as we think about other OpEx through the remainder of the year, it will be a little bit above where we were on a full-year basis as a percentage of revenue versus 2025, and that is largely due to the digital mix that I mentioned earlier.
Thank you for your question. Your next question comes from the line of Danilo Gargiulo from Bernstein. Your line is now open.
Thank you. I have, first of all, a clarification on, Tricia, on your statement that April, you know, the recent data is tracking on track with the first quarter actual. So I was wondering whether you were referring to the average that you have achieved in the first quarter or whether you were referring to the exit rate. Then stepping back, maybe this is more for Brett. Like, if you were to think about the swinging factors that you have at your disposal for this year, what do you think is going to be driving you to get to the high end of the guidance versus the low end given that you have significant opportunities ahead of you and you have already demonstrated that in the first quarter? Thank you.
Regarding your question about our same-restaurant sales assumptions and what we are experiencing, our same-restaurant sales trends in the second quarter are in line with our overall same-restaurant sales in the first quarter and tracking above our revised full-year guidance.
And, Danilo, to the second question, we are going to stay steadfast in our long-term strategy with consistent, methodical menu innovation to excite our guests that does not create operational complexity. Tricia talked about some of the potential investments that we have accounted for in restaurant-level margin to lean in and elevate our warm Mediterranean hospitality. We are continuing our operational execution while mitigating menu price increases. We are very focused on making sure we do not have to pass through inflationary pressures to our guests, and that has been something we have worked very hard on in recent years. Whether it is underpricing peers by more than half, whether it is taking less than half the price increase of CPI, that has delivered great value every day that we think drives traffic over the long haul. So we will continue to focus on those. We have also talked in the past about the opportunity to continue to lean in and pull our marketing lever. It has been a smaller portion as a spend of our percentage of revenue versus our peers, and we see opportunities to continue to be very cost effective with our marketing but elevate awareness. We have grown our awareness now from 62% to 66% across the country, and that certainly helps drive more people to try CAVA. When they try it, they like it, and they come back more frequently.
Your next question comes from the line of Andrew Charles from T. B. C.ohen. Andrew, your line is now open.
Brett, thank you. This is Zach Ogden on for Andrew. So the acceleration you saw in same-store sales to start the year is contrary to what most of your peers saw. So do you rank the drivers of that acceleration between white sweet potatoes, any marketing investment, any improvement in your consumer, or maybe some other factors as well?
Certainly, when we look at same-restaurant sales in Q1, we believe it is a combination of our amazing culinary brand — cuisine where taste and health unite for guests across the country — at a time where it is meeting the needs of the modern consumer and meeting their desires from an experience standpoint, bundled with warm hospitality and delivering on what Brett talked about: a great value every day. Those things together are significant contributors to the overall performance. You mentioned white sweet potatoes. We brought back that fan favorite, and our guests just love it. It drove frequency, brought in new guests, and created a unique option for our guests as a complimentary main item. It does not appear to be a single factor driving the overall same-restaurant sales performance. When you look at the comps across the country, we saw great strength in every region of the country, great strength across all of our vintages, and in fact, when you look at our restaurants based on their median household income in their market, all of those cohorts are performing very well. Our lower-income cohorts continue to outperform as we bridge this K-shaped economy.
Thank you.
Your next question comes from the line of Gregory Francfort from Guggenheim Securities. Your line is now open.
Hey, thanks for the question. I just wanted to maybe unpack the digital sales — I think you hit almost 40% this quarter, and a few years ago it was maybe 35%. How much of that is being driven by third-party delivery versus your first-party digital channels, and what is the strategy or goal for that breakdown over time? Thanks.
When we look at our digital mix, we are seeing improvements. Going back to what I said earlier, we designed our channels to drive the same level of profitability on a dollar basis regardless of how guests choose to dine with us. In the quarter itself, we are seeing improvement in third-party delivery mix overall, and we are also seeing improvement in other channels as well within digital that are driving the increase from the 36% level in prior years closer to 40% today.
Thank you for your question. Your next question comes from the line of Brian Harbour from Morgan Stanley. Your line is now open.
Thanks. Good afternoon. Could you comment on what you have seen from salmon so far? The core data suggests it is doing well, but anything about new customers, frequency, consistency of the product across the store base? And is the assumption that this is kind of a permanent seafood offering at this point?
Hey, Brian. We are pleased with the performance of salmon. It is in line with what we saw in our market tests and our expectations. We are very proud of the team; they did a rigorous stage-gate process to test and ensure that we could execute a delicate protein at a high level for our guests. We have been very pleased with execution across the fleet and have not committed to salmon being an everyday item, but do expect it to run through the fourth quarter at minimum.
Thank you for your question. Your next question comes from the line of Christopher O'Cull from Stifel. Your line is now open.
Brett, I know you talked about testing roasted garlic shrimp last quarter, and I was curious if you could give an update on that in the stage-gate process. I know we have seen some emails here in our local market, but I am not sure if that is indicative of a national rollout or if we are still in test. And more broadly on LTOs in general, how are you thinking about pace and sequencing of LTOs relative to past years, when many peers have accelerated the pace of innovation? You have a lot of momentum, but curious what your customer and the business are telling you about the right pace for CAVA.
I am guessing he might be in Northern New Jersey or Nashville where our market tests are going on for roasted garlic shrimp. That has moved to the next stage of the stage-gate process. Originally, it was an operations test; we are now in a market test, which is a broader test and would be the last stage of proof points before a more national launch. It is following the same disciplined process we have been doing for a number of years and matches our culinary roadmap: a tentpole moment each year bracketed by seasonal moments. We think that is the right pace — the balance we are trying to strike — to have the right amount of newness and excitement for our guests without overcomplicating operations. We are focused on delivering exceptional operations every restaurant, every shift with warm hospitality, so we want to be mindful of how much newness we drive in and operational complexity on our operators while balancing the excitement our guests have when we bring them new culinary items. Expect a tentpole moment each year bracketed by a few seasonal moments like you saw with roasted white sweet potatoes; we have a few fun things coming this summer, and we will continue to do collaborations like we did around the NCAA tournament.
Your next question comes from the line of Brian Mullan from Piper Sandler. Your line is now open.
Thank you. Brett, you mentioned operations. With Doug Thompson having a bit more time in the role, can you talk about what he has been most focused on so far? What are the most important priorities for that role for the balance of the year? And if you could layer on how your very strong growth in traffic might influence timing or order of priorities, that would be helpful.
Three main priorities. First and foremost for Douglas is people development. Douglas is an experienced leader of people and a developer of future leaders. Very excited to have him on board. So building out our pipeline — and that AGM investment is part of that — of future leaders, not only to help maintain operational integrity across all shifts, including lunch, dinner, and weekends, but also to build a deeper pipeline of future leaders to open new restaurants with operational integrity. New restaurant opening excellence is another priority given the intense volumes we are seeing and new restaurant productivity; we want to make sure that we protect those guests' experiences when they come in and they experience the best version of CAVA. We are very excited about some of the additions we have made in our recent Ohio openings that have helped deliver better experiences on these NROs. Lastly, but not least, is hospitality — it has been core to our brand essence. It's not just our Mediterranean cuisine where taste and health unite, but it's our warm Mediterranean hospitality. I think we are good at delivering that across the country, but we want to be great and exceptional at it. We have opportunities to do that more consistently across every restaurant, every shift, and Douglas has decades of experience delivering that. I'm excited for him to bring that experience to CAVA and help us elevate from good to great.
Thank you. Your next question comes from the line of John Ivankoe from JPMorgan. Your line is now open.
Hi. Thank you. First, on operations related to catering, Brett, can you talk about your experience with catering, particularly in some of the busier, more urban stores? Do you want to do it out of existing CAVA outlets or would some purpose-built assets make sense to better serve the catering daypart? Second, you've long talked about human resources and developing talent as the number one gating factor to the speed of growth. Tricia, you mentioned the balance sheet: you have $400 million of cash, a $150 million undrawn revolver, and you are generating cash. It seems like you might be in a position to consider asset-type deals to support growth. Where are you in terms of potentially using the balance sheet and overall cash flexibility to accelerate development over the next couple years as opportunities arise?
We have a market test going on in Houston that we have spoken to in the past. We plan to expand that to a second market later this year. One of the goals of the test, and we think the critical aspect of it, is understanding capacity management and load balancing. We have tremendous demand in catering; we know there is a lot of demand out there, but we want to make sure we position our operators to successfully meet that demand and meet our commitment on the catering experience. To your point, we do have 20-plus purpose-built locations that include hybrid kitchens and digital kitchens with extra hub central production capacity. We are testing in regular CAVA restaurants to understand strategically how we want to move forward. Is it more purpose-built centralized production complemented with regular CAVA restaurants, or is it more centralized production only? We want to be very patient, methodical, and disciplined because we know the revenue potential is out there, but when we open the spigots or roll out catering broadly, we need to do so with operational integrity. More to come, but we will expand the test later this year to a second market to better understand load balancing and capacity management.
John, as it relates to our balance sheet, we are in a very strong position that you called out and certainly the highest and best use of our cash is investing in new restaurant openings. As you rightfully acknowledged, the biggest governor to that growth is ensuring we have a bright pipeline of role-ready leaders to open those restaurants successfully. So we will consider and evaluate asset deals and how to further augment our very robust real estate pipeline, but we want to be thoughtful and not go after assets that we would not be able to support. At the same time, as we have looked at opportunities to invest in real estate through different acquisitions, we find that it is often better to wait and acquire those assets on their own through different means. It is often a more effective deployment of capital in the end and less of a distraction to the business. Our balance sheet provides lots of flexibility and options. We are always evaluating investments we can make in cash to drive incremental returns for the business, but at this time, the highest and best use of capital is in new restaurant openings.
Your next question comes from the line of Brian Vaccaro from Raymond James. Your line is now open.
Hi. Thanks. You noted the strength in the third-party delivery channel; curious what you would attribute that to. Are there tangible improvements in execution, order accuracy, etc., or any changes in the agreement with third-party delivery that are worth noting? And then just a follow-up on the AGM program: could you remind us what percentage of the store base today has an AGM in place? Thank you.
If you remember last year, we spoke about our kitchen display screen investment and rollout, and that is absolutely driving better productivity, better order accuracy, and better digital order management. That has driven growth in both our third-party channels as well as our first-party digital channels and pickup. It has helped equip our team with tools to be more successful and deliver on our guest commitments, which is driving overall growth in digital channels.
With regards to AGMs in our restaurants, we are focused on placing AGMs in higher-volume locations. I have not disclosed the exact number yet, but I would say it is approaching above 50% of the locations. It is a progressive process.
Your next question comes from the line of Jacob Aiken-Phillips from Melius. Your line is now open.
Brett, thanks. This is Sam on for Jacob. I want to focus on CavaCore and the data infrastructure you mentioned in the prepared remarks. Is that rolled out? Where do you expect the earliest measurable benefits to show up? Is it demand forecasting, labor deployment, something else? Is the bigger opportunity near-term restaurant execution or more longer-term guest engagement? Thanks.
I think it is both and a third: restaurant operational efficiency, guest engagement, and business intelligence insights at the corporate level. What we are seeing already is significant productivity enhancements across our enterprise from automating many manual and spreadsheet-type tasks, whether in the finance function or other functions. At the restaurant, this foundation enables predictive prep, predictive cook, labor scheduling, and inventory management. It allows us to pull those levers and take complexity off our team members' mindshare to help position them to deliver fresh food, mitigate waste, and deliver on our operational commitments without doing a lot of manual computations themselves. This lays the groundwork for a decade-plus transformation and will enhance our team members' experience across both support centers and restaurants. We always talk about using technology to enhance the human experience, not replace it, and this will empower our team members to be more productive and successful and free them up to deliver heart, health, and humanity through hospitality.
Your next question comes from the line of Maggie Makde from Wolfe Research. Your line is now open.
Thanks for taking my question. Brett, you said that national awareness built — I wanted to understand how you are scaling your marketing investments in newer markets to build awareness ahead of unit growth. And then, Brett, a couple quarters ago you said the 25-to-34-year-old cohort had lost some frequency. Would it be fair to say you are seeing that recover?
From a marketing standpoint, last year we increased spend from about 1% of revenue to 1.2% of revenue, and we continue to lean into it. It is not specific to new markets; it is general across the country. We have so much pent-up demand when we open in new markets that we have not needed to add incremental local marketing beyond the general awareness activities and the word-of-mouth excitement in preparation for openings. At this point, we are focused on driving broader general brand awareness; you saw that with the salmon launch campaign and some activations and collaborations. We will continue to lean into brand building. Regarding the 25-to-34-year-old cohort, when we referenced that late last summer and early fall we were seeing a dip, we saw that cohort firm up at the end of the year, and that improvement carried into this year. We have seen that momentum sustain year-to-date.
Your next question comes from the line of Logan Reich from RBC Capital. Your line is now open.
Hi there. This is Amira on for Logan. You mentioned continued strong momentum despite the geopolitical and macro backdrop. Could you provide any color on changes, if any, that you might have seen in consumer behavior post the start of the Middle East conflict relative to before the start of the conflict?
We have not seen any shift in consumer behavior. We have seen consistency across regions, age cohorts, and income cohorts. Interestingly, which may be counterintuitive compared to some industry peers, the lower end of the income strata has performed the strongest. We've seen strength across all income cohorts, but the best performance has been in the bottom half of the income strata. That excites us because we are welcoming more people to our table. We try every day to make our food more accessible and affordable and to bridge the K-shaped economy by having premium offerings for guests who want to lean into items like pomegranate-glazed salmon or grilled steak, while also offering accessible everyday value for guests who are more price sensitive. We have not seen deterioration in our premium incidence rate; that has held steady. We remain mindful and have tried to incorporate the challenges consumers are facing and geopolitical uncertainty into our guidance, but we have not seen a deterioration in the current year.
Thank you. Your next question comes from the line of J.P. Wollam from Roth Capital Partners. Your line is now open.
Brett, appreciate you taking my question. On unit cadence, it looks like about 20 — a little more than 25% of the full-year guide came in Q1. Just curious if that was some pull-forward of a few units that snuck in there, or how you are thinking about unit-opening cadence for the rest of the year.
Keep in mind that we had 16 weeks in the first quarter, so there was an outsized number of weeks in that quarter. The rest of the year has 12-week quarters, and I would expect the cadence to be fairly ratable over the remainder of the year.
Your next question comes from the line of John Tower from Citigroup. Your line is now open.
Brett, thanks for taking the question. You mentioned earlier that the brand has taken much less pricing versus the industry relative to pre-COVID levels, and that seems to be resonating with guests in the form of traffic. Do you have data that suggests guests are choosing CAVA over competitors because of that price point? And given the strength in traffic and some pressures picking up, notably energy, would you consider taking some price in the balance of the year to offset some of that?
We would not look to take price. We have reflected in our restaurant-level margin guidance that we look to absorb some of the fuel surcharges and other inflationary pressures and not pass them along to guests. We think that is important and mindful of the pressures everyone's facing. We do have internal brand-health surveys; we do biannual brand-health surveys and we score very well on value. We even ask a question about recreating this food at home, and we are unique and distinct in that respect. It is a strong comparison for someone who is looking to make food at home: we are a differentiated, unique option for them to outsource their cooking. We have seen that comparison be very strong versus peers and food at home, with strong value scores. We continue to focus on inviting more people to our table. A couple years ago when a local regulation changed in California (AB 28), we chose not to increase price while many others did, and our traffic in California was stronger as a result. So we do have data points that suggest being thoughtful about price translates into traffic performance.
Your next question comes from the line of Matt Curtis from D.A. Davidson. Your line is now open.
Thanks for taking the question. Circling back on the lower-income cohort that performed, could you explain why your value proposition is attractive to them given price sensitivity? And separately on development, are you seeing any pressure from higher energy bleeding into your construction cost at this stage?
We do not view value as just price; we view it as a combination of factors: the quality of ingredients, the relevance of our unique Mediterranean cuisine, the convenience for our guests, and the experience we deliver when they visit and share a meal. It's bang for the buck. We are not the lowest price option — we're serving fresh Mediterranean cuisine, not freezer-to-fryer food — but we try to serve it at the most reasonable price we can with great hospitality. That focus is resonating with guests and our numbers reflect that they are choosing to spend their dollars at CAVA.
As it relates to development, at this point we have not seen any pressure from the energy surge on construction costs. The team is very active in staying ahead of challenges and mitigating them where possible, continuing to drive outsized cash-on-cash returns as they have done effectively over time.
Your last question comes from the line of Sagarika Jaisinghani from Bank of America. Your line is now open.
Brett, thank you. On loyalty and traffic trends, you revamped the loyalty program about 18 months ago. The last few quarters have been strong. Are you seeing increased engagement in the loyalty program that is converting to traffic? Any color on member growth, outperformance of loyalty contribution compared to total company, and how members are engaging would be helpful.
Our loyalty program has been effective. It has increased our loyalty pool and we are seeing improved frequency as a result, as well as progression in tiers that is meeting our expectations. We are really happy with what we are seeing. The loyalty program is driving engagement, and offers we create can build excitement. It is an opportunity for us to continue to leverage that data to deepen connections with guests and drive improved performance over time.
There are no further questions at this time. I will now turn the call back to Brett Schulman, Co-Founder and CEO, for closing remarks.
Thanks everyone for joining us today and for your continued support. As we look ahead, we remain focused on building this business with the same long-term mindset and discipline that has guided us from the beginning: staying true to our mission, investing in our people, and continuing to make Mediterranean cuisine more accessible to communities across the country. Before we wrap, I want to again thank our nearly 15,000 team members whose passion, care, and commitment make it possible for us to deliver on our mission to bring heart, health, and humanity to food every day. Their dedication is what makes CAVA special, and we are incredibly grateful for all they do for our guests and one another. With Memorial Day weekend approaching, we wish everyone a safe and meaningful holiday weekend and we look forward to speaking with you again next quarter.
This concludes today's call. Thank you for attending. You may now disconnect.