Good morning. Mediterranean restaurant chain Cava is attracting diners of all income levels with the help of a new menu item: grilled steak. Sales are soaring for the topping, which customers can add to their salads or pitas alongside the usual assortment such as roasted corn, feta cheese, and red pepper hummus.
The premium grilled steak option, introduced in June with a buzzy social media and PR campaign, “resonated even more with the consumers than we were experiencing in tests,” CFO Tricia Tolivar told me before the company reported its Q2 2024 earnings on Thursday.
In Q2, Cava’s store traffic increased 9.5% year over year while its same-store sales rose 14.4%, the company reported on Thursday after market close. Quarterly revenue rose 35% to $231.4 million, up from the $219.5 million analysts had expected. Earnings per share came in at $0.17, beating expectations by four cents. Quarterly net income almost reached $20 million, compared to $14.8 million expected and up from $6.5 million last year.
Cava raised its fiscal full-year 2024 guidance for same restaurant sales growth to between 8.5% and 9.5% from 4.5% to 6.5%.
Few restaurant stocks have come close to keeping pace with Cava since it went public at $22 per share in June 2023, Fortune reported. Shares nearly doubled on the first day of trading and have soared nearly 140% more since, trading above the $100 mark before the latest earnings. In after-hours trading on Thursday, shares jumped more than 9% to $111.40.
“At Cava, we have not seen a lot of challenges in consumer spending, so our guests have been very resilient,” Tolivar said. The company is seeing double-digit same restaurant sales growth across all income levels, from customers who earn at least $100,000 annually to customers who earn $50,000 or less.
The top 10% of Cava restaurants based on sales include locations across all income strata. “There’s all different regions of the country represented as well as urban and suburban classifications and various formats including freestanding and in-line locations,” Tolivar said.
In January, Cava raised prices by nearly 3% on average to offset inflation for the ingredients it uses. “We’re not anticipating any additional price increases in 2024, and we’re evaluating 2025 over time,” Tolivar said.
Cava opened 18 net new restaurants in Q2, bringing the total to 341, which are primarily across the East Coast, the Southwest, and Southern California. Tolivar and Cava CEO Brett Schulman work with the real estate team on selecting new locations across the country. When opening new restaurants, the company typically allocates about 10% to 20% to existing markets and 20% to 30% in entirely new markets. The rest of the restaurants are designated to growth and emerging markets, areas where the company specifically takes into account the surrounding population of a city or town where a new restaurant would go. For example, smaller populated areas are considered “emerging.”
Cava now plans to open 54 to 57 restaurants this year, up from 50 to 54 in previous guidance, with the goal of 1,000 restaurants total by 2032. And grilled steak, which Tolivar now says is her favorite, is seemingly a mainstay on the menu.
Have a good weekend.
Sheryl Estrada
sheryl.estrada@fortune.com
The following sections of CFO Daily were curated by Greg McKenna
Leaderboard
Some notable moves this week:
Kelly Steckelberg, CFO of Zoom Video Communications, Inc. (Nasdaq: ZM ), has resigned, according to an SEC filing. Steckelberg's decision was not the result of any disagreement with the company, the filing states. She will continue as CFO through Oct. 31, but on a part-time basis beginning on Oct. 10. The company has commenced a search for a CFO. Steckelberg has served as finance chief since 2017. She led the company through its IPO in 2019.
Markus Neubrand, CFO of Guess?, Inc. (NYSE: GES) is stepping down to pursue another opportunity that will bring him closer to his family, according to the company. Neubrand joined Guess? as CFO in August 2023. Dennis Secor was named interim CFO of Guess?, effective Aug. 26. Secor currently serves as EVP of finance.
Joy Mbanugo was named CFO of CXApp Inc. (Nasdaq: CXAI), a global technology company that provides an SaaS platform for workplace experiences, effective immediately. Mbanugo will oversee the company’s financial strategy and operations. She brings over 22 years of financial leadership experience.
Josh Baugher was promoted to CFO of Argan (NYSE: AGX), an energy services company, effective Sept. 15. He will succeed Richard H. Deily, who is retiring after 17 years with the company. Baugher has served as a VP and corporate controller for Argan since 2022.
Patrick Keslin was promoted to SVP and CFO of Wabash (NYSE: WNC), one of North America’s largest manufacturers of semi-trailers and liquid transportation systems, effective Sept. 1. He will succeed Mike Pettit, who is transitioning from his current role to the newly created of position of chief growth officer.
Yuning Feng was appointed CFO of Yiren Digital (NYSE: YRD), a Chinese fintech company. He will succeed Na Mei, who has resigned for personal reasons and will remain at parent company CreditEase, the company said. Feng comes to Yiren from GEO Innovation Capital, where he was a partner.
Stefan Schellinger was appointed CFO of Ardagh Metal Packaging (NYSE: AMBP), a manufacturer of beverage cans, effective Sept. 1. He will succeed current CFO David Bourne, who has decided to move on to new opportunities, the company said. Schellinger most recently served as CFO and executive director of ContourGlobal, a British energy business.
Rory O’Donnell was appointed CFO of GrafTech (NYSE: EAF), an electrical components manufacturer, effective Sept. 3. He will succeed interim CFO Catherine Hedoux-Delgado, who was promoted last September after then-CFO Timothy Flanagan was appointed CEO and president of the company.
Big Deal
Almost 80% of S&P 500 companies who have reported second quarter earnings have beaten earnings per share estimates, according to recent data from S&P Global Market Intelligence. Over 60% of companies have posted revenue above expectations, while 54% have beaten estimates for both EPS and revenue.
The S&P had gained almost 13% in Q2 as of Wednesday. Consumer services led all sectors with 28% growth, with information technology (19%) and healthcare (18%) rounding out the top three. Consumer discretionary also showed a big jump, trending up to 12.5% from 7% a month ago.
Going deeper
Here are a few Fortune weekend reads:
“Private equity is finally coming for the NFL: Here’s who’s making a play for a piece of the action,” by Luisa Beltran
“Mike Lynch was ‘Britain’s Bill Gates’—but the late tech millionaire would spend many of his final months under house arrest,” by Ryan Hogg
“I lead a major bank in Kenya. Here’s why we invest in Africa’s women entrepreneurs,” by Annastacia Kimtai
“Former United Airlines CEO: Activist investors are wrong about Southwest. Running an airline requires more than just financial acumen,” by Oscar Munoz
Overheard
“I grew up in Michigan, captivated by its unique natural beauty, our people, the inspiring history of our cities, and our impact on the world. The connection was so intense that when I moved away after college graduation, I consistently bragged about my home state. I even got Michigan’s outline tattooed on my wrist.”
—Michigan’s chief growth officer Hilary Doe writes in her Fortune opinion piece titled, “I’m the first chief growth officer for a U.S. state. Gen Z and millennials flock to places with these attributes.”