CAVA's EBITDA Momentum Builds Up: Will Profitability Keep Rising?

CAVA Group, Inc. CAVA is firing on all cylinders, delivering one of its strongest quarters yet in terms of profitability. In the first quarter of 2025, the fast-casual Mediterranean brand reported adjusted EBITDA of $44.9 million, up 34.6% from $33.3 million reported in the year-ago quarter.

The company credits its EBITDA growth to strong traffic-led sales, operational efficiency and leverage across key cost lines. During the quarter, same-restaurant sales climbed 10.8% year over year, fueled by a 7.5% increase in guest traffic. Restaurant-level profits reached $82.3 million, supported by disciplined G&A spending and stable labor and occupancy costs as a percentage of sales. Top-quartile restaurants (with AUVs above $4 million) posted margins exceeding 30%, highlighting the durability of CAVA’s unit economics.

CAVA’s momentum is further supported by enhancements in restaurant operations and digital infrastructure. The company’s Connected Kitchen initiative and revamped labor deployment model are driving productivity gains and boosting guest satisfaction. These initiatives are expected to continue improving throughput and margin performance as the rollout expands to more locations in 2025.

While inflation and macro headwinds remain a consideration, CAVA expects food cost pressures from steak to ease by midyear, potentially offering further support to restaurant-level margins. With consistent traffic trends across formats and geographies, the company’s growth trajectory remains firmly intact. CAVA reaffirmed its full-year 2025 adjusted EBITDA guidance of $152 million to $159 million.

How CAVA Fares Against Competitors

Shake Shack, Inc. SHAK is making progress on its multi-year margin expansion strategy, but it still operates at a lower profitability level. In the first quarter of fiscal 2025, Shake Shack reported adjusted EBITDA of $40.7 million, up from $35.9 million in the year-ago quarter. Adjusted EBITDA margin expanded 30 bps year over year to 12.7%. Management now expects to grow adjusted EBITDA by 17%-22% in 2025, aided by process improvements, store-level productivity and a more measured pricing approach. While Shake Shack’s EBITDA margin remains below CAVA’s, its consistent expansion in unit count and enhanced drive-thru operations could support gradual convergence over time.

Brinker International, Inc. EAT delivered an 80% year-over-year increase in adjusted EBITDA to $221 million in the third quarter of fiscal 2025. During the quarter, restaurant operating margin reached 18.9%, up 470 basis points year over year, driven by strong same-restaurant sales growth (28.2%) and menu simplification. Brinker has also made progress on G&A leverage and capital reinvestment while maintaining a balanced capital allocation strategy. However, as a more traditional casual dining player, Brinker operates with higher fixed costs and macro exposure compared to fast-casual peers. Although the company is reporting strength in execution, its margin profile remains structurally lower than that of CAVA.

The Zacks Rundown for CAVA Stock

CAVA’s shares have lost 8.3% in the past three months against the industry’s 3.1% rise.

CAVA Three-Month Price Performance