Q1 2025 CAVA Group Inc Earnings Call

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Speaker Change: [noise] good afternoon, ladies and gentlemen, and welcome to the call the first quarter 'twenty 25 earnings.

Operator: Good afternoon, ladies and gentlemen, and welcome to the CAVA First Quarter 2025 Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session.

Speaker Change: Since call at this time all lines are in listen only mode. Following the presentation. We will conduct a question and answer session. He put down at times. During this call did you acquire them you get assistance. Please press star zero for the operator. This call is being recorded on May 15, 2025, I would now like it's turned the corner.

Operator: If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on May 15, 2025.

Matt Milanovich: I would now like to turn the conference over to Matt Milanovich. Please go ahead.

Speaker Change: Friends, So Richard Matt Milanovic. Please go ahead.

Matt Milanovich: Good afternoon and welcome to Cava's first quarter 2025 financial results conference call. Before we begin, if you do not already have a copy, the earnings released and related 8K 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.

Speaker Change: Good afternoon, and welcome to <unk> first quarter 2025 financial results Conference call.

Speaker Change: Before we begin if you do not already have a copy of the earnings release and related 8-K furnished to the SEC are available on our website at investor Dot com or dot com.

Speaker Change: The purpose of this conference call is to give investors further details regarding the company's financial results as well as the general update on the company's progress.

Speaker Change: You will find reconciliations of any non-GAAP financial measure.

Speaker Change: 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 Companys web site.

Matt Milanovich: 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 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.

Speaker Change: 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.

Speaker Change: That could cause actual results to differ materially from those discussed here today.

Speaker Change: These risk factors are explained in detail in Cabos. Most recent annual report on Form 10-K, and other filings with the SEC.

Speaker Change: 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 <unk> undertakes no obligation to publicly update or revise any forward looking statements.

Matt Milanovich: 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 statements, whether as a result of new information, future developments, or otherwise.

Speaker Change: Whether as a result of new information future developments or otherwise.

Brett Schulman: And now I'll turn the call over to the company's co-founder and CEO, Brett Schulman. Thanks, Matt, and welcome to the call, everyone. In the first quarter of 2025, we continue to demonstrate the strength of our category defining brand, further cementing Mediterranean as the next major cultural cuisine category. Despite broader uncertainty, we sustained momentum, delivered strong results, including positive traffic, and expanded our reach, reinforcing our ability to capture the substantial white space opportunity in front of us. Regardless of near-term headwinds, we remain unwavering in our long-term strategic approach, and our value proposition remains clear and compelling.

Speaker Change: And now I'll turn the call over to the Companys co founder and CEO Brett Feldman.

Brett Feldman: Thanks, Matt and welcome to the call everyone in the first quarter of 2025, we continued to demonstrate the strength of our category defining brand further cementing Mediterranean as the next major cultural cuisine category.

Brett Feldman: Despite broader uncertainty we sustained momentum delivered strong results, including positive traffic and expanded our reach reinforcing our ability to capture the substantial white space opportunity in front of us.

Brett Feldman: Regardless of near term headwinds, we remain unwavering in our long term strategic approach and our value proposition remains clear and compelling our.

Brett Schulman: A menu where taste and health unite, delivered with the relevance, convenience, quality, and experience today's guests seek. Powering this momentum is our unit economic engine, remaining strong and steadfast, while fueling our growth and brand loyalty. Our first quarter highlights include a 28.2% increase in Cava revenue. Cava's same restaurant sales growth of 10.8% driven by 7.5% traffic. 15 net new restaurants, ending the quarter with 382 restaurants, an 18.3% increase year over year, adjusted EBITDA of $44.9 million, a 34.6% increase over the first quarter of 2024, net income of $25.7 million, an 83.7% increase over the first quarter of 2024, and $2.7 million in free cash flow.

Brett Feldman: A menu where tastes and health unite delivered with the relevance convenience quality and experienced today's guests seek <unk>.

Brett Feldman: Powering this momentum is our unit economic engine remaining strong and steadfast, while fueling our growth and brand loyalty.

Brett Feldman: Our first quarter highlights include a 28, 2% increase in copper revenue.

Brett Feldman: Kind of a same restaurant sales growth of 10, 8% driven by seven 5% traffic.

Brett Feldman: <unk> 15, net new restaurants, ending the quarter with 382 restaurants, and 18, 3% increase year over year adjusted EBITDA of $44 9 million, a 34, 6% increase over the first quarter of 2024 net income was $25 7 million and 83 seven.

Brett Feldman: <unk> increase over the first quarter of 2024, and $2 7 million and free cash flow.

Brett Schulman: In addition to these highlights, I'm proud to say that on a trailing 12-month basis, we have now surpassed $1 billion in revenue, a milestone that is a testament to Mediterranean becoming the next large-scale cultural cuisine category, a category we have firmly established our leadership in. In a fluid macroeconomic environment, our performance this past quarter underscores the strength of our value proposition and the enduring relevance of our brand. At a time when tomorrow feels unclear to many, our ability to deliver bold, flavorful, health-conscious food paired with convenience and genuine human connection is a strategy for success.

Brett Feldman: In addition to these highlights I'm proud to say that on a trailing 12 month basis, we have now surpassed $8 billion in revenue a milestone that is a testament to Mediterranean, becoming the next large scale cultural cuisine category a category, we have firmly established our leadership in.

Brett Feldman: And a fluid macroeconomic environment our performance this past quarter underscores the strength of our value proposition and the enduring relevance of our brand.

Brett Feldman: At a time when tomorrow field unclear to many our ability to deliver bold flavorful health conscious food paired with convenience and genuine human connection is a strategy for success.

Brett Schulman: What sets us apart is beyond what we serve. It's the community we cultivate that defines our brand. That strength has always been deeply aligned with our mission to bring heart, health and humanity to food, and it continues to resonate with guests across our geographically diverse market. Our growth is driven by both intention and momentum as we lean into our first strategic pillar, expand our Mediterranean way in communities across the country. This quarter, we entered Indiana, expanding our footprint to 26 states and the District of Columbia. Additionally, we deepened our presence in Florida with the opening of our Hialeah location, marking our highly anticipated entry into the greater Miami area.

Brett Feldman: What sets us apart is beyond what we serve it's the community we cultivate that defines our brand.

Brett Feldman: That strength has always been deeply aligned with our mission to bring heart health and human indeed to food and it continues to resonate with guests across our geographically diverse markets.

Brett Feldman: Our growth is driven by both intention and momentum as we lean into our first strategic pillar expand our Mediterranean way in communities across the country.

Brett Feldman: This quarter, we entered Indiana, expanding our footprint to 2006 states and the district of Columbia.

Brett Feldman: Additionally, we deepened our presence in Florida with the opening of our Hialeah location, marking our highly anticipated entry into the greater Miami area.

Brett Schulman: Looking ahead, we are excited to continue expanding across the Midwest and Mid-Atlantic with upcoming new market entries in Detroit and Pittsburgh. We are well on our way to our goal of at least 1,000 restaurants by 2032, creating more spaces where connection, community, and Mediterranean hospitality can thrive. The in-restaurant experience remains a vital part of how we foster this connection, and we're committed to bringing this to life through our Project Soul Initiative. By incorporating natural light, softer seating, enhanced greenery, and warm, inviting tones, we're creating spaces where guests feel welcomed. Places designed for gathering, sharing, and creating meaningful moments.

Brett Feldman: Looking ahead, we are excited to continue expanding across the Midwest mid Atlantic with upcoming new market entries in Detroit in Pittsburgh We.

Brett Feldman: We are well on our way to our goal of at least 1000 restaurants by 2032, creating more spaces, where connection community and Mediterranean hospitality can thrive.

Brett Feldman: Okay.

Brett Feldman: The in restaurant experience remains a vital part of how we foster this connection and we're committed to bringing this to life through our projects solar initiatives by.

Brett Feldman: By incorporating natural light softer seating enhanced screeners and warm inviting tones were creating spaces, where guests feel welcomed places designed for gathering sharing and creating meaningful moments.

Brett Schulman: We will continue to challenge the idea that the dining room is a relic of the past and were recently recognized for our efforts around Project Soul and fast companies, world's 50 most innovative companies as number one in restaurants, dining and food services, and number 13 overall. Now, more than ever, people are seeking human connection and we aim to meet that need by delivering the warmth and hospitality that defines the Cava brand. And that same warmth and hospitality extends well beyond our physical spaces. It's reflected in what we serve and why our guests continue to return to our table.

We will continue to challenge the idea that the dining room is a relic of the past and were recently recognized for our efforts around projects soul and SaaS companies Worlds 50, most innovative companies as number one in restaurants dining and food services and number 13 overall now.

Brett Feldman: Now more than ever people are seeking human connection and we aim to meet that need by delivering the warmth and hospitality that defines the <unk> brand.

Brett Feldman: And that same warmth and hospitality extends well beyond our physical spaces. It's reflected in what we serve and why our guests continue to return to our table.

Brett Schulman: This summer, we're leaning into flavor and relevance with the launch of our Spice World A celebration of bold, spicy offerings that capture the spirit of the season without compromising health. As part of this campaign, we debuted Hot Harissa Pita Chips, a bold, spicy take on our fan favorite chips, leveraging our existing pantry, mitigating added operational complexity, and bringing the heat just in time for summer. In tandem, we're launching two new chef-curated bowls, Steak and Harissa and Spicy Lamb and Avocado, each designed to spotlight vibrant flavor profiles and offer guests even more ways to experience the warmth of the Mediterranean.

Brett Feldman: This summer, we're leaning into flavor and relevance with the launch of our Spice World campaign.

Brett Feldman: Celebration of bold spicy offerings that capture the spirit of the season without compromising health.

Brett Feldman: As part of this campaign, we debuted hot <unk> chips are bold spicy take on our fan favorite chips, leveraging our existing pantry mitigating added operational complexity and bringing the heat just in time for summer <unk>.

Brett Feldman: Tandem, we're launching two new chef curated bowls steak, <unk> and spicy Lam and avocado each designed to spotlight vibrant flavor profiles and offer guests even more ways to experience the warmth of the Mediterranean.

Brett Schulman: Seasonal moments like these reflect who we are as a brand. Innovative, intentional, and attuned to what today's guests are craving, all while staying true to our concept. A key tenet of our concept essence is our spirit of generosity. Something we were able to bring to life this past quarter through our newest brand moment, National PETA Day. On March 29th, we celebrated this social holiday as a platform to deepen connection with our community, anchored by the debut of a playful new team member, Peter Chip. Peter Chipp's birthday was purposefully aligned with National PETA Day. celebrated with complimentary petitions for all Cava Rewards members.

Brett Feldman: Seasonal moments like these reflect who we are as a brand innovative intentional and attuned to what today's guests are craving, all while staying true to our concept essence.

Brett Feldman: A key tenant of our concept essence is our spirit of generosity.

Brett Feldman: We were able to bring to life this past quarter through our newest brand moment National Pizza day.

Brett Feldman: On March 29th we celebrated the social holiday as a platform to deepen connection with our community anchored by the debut of a playful new team member Peter Chip.

Brett Feldman: Peter chips birthday was purposefully aligned with national peer today <unk>.

Brett Feldman: Celebrated with complimentary pita chips for all cover rewards members.

Brett Schulman: National PETA Day exemplified how we bring generosity, cultural relevance, and guest engagement together in a way that builds brand affinity and drives business results. By aligning the promotion with a branded holiday and social storytelling, we saw increased reach, record high app traffic, and over 130% more rewards redeemed than originally anticipated. It's a launch we're excited to build on in the years ahead. As we grow our loyalty base and bring more guests into our first-party ecosystem, we're unlocking new opportunities to advance our second pillar, deepening personal relationships with guests even as we scale. Campaigns like National PETA Day not only reflect our brand's spirit of generosity, they also serve as dynamic testing grounds for how we engage and excite our growing first-party audience.

Brett Feldman: National Pizza day, exemplified how we bring generosity cultural relevance and guest engagement together in a way that builds brand affinity and drives business results by.

Brett Feldman: By aligning the promotion with a branded holiday and social storytelling, we saw increased reach record high app traffic and over 130% more rewards redeem than originally anticipated.

Brett Feldman: Launched we're excited to build on in the years ahead.

Brett Feldman: As we grow our loyalty base and bring more guests into our first party ecosystem, we are unlocking new opportunities to advance our second pillar deepening personal relationships with guests even as we scale.

Brett Feldman: Campaigns like National Pizza day, not only reflect our brand spirit of generosity. They also serve as dynamic testing grounds for how we engage and excite our growing first party audience. These.

Brett Schulman: These initiatives give us valuable insights that inform the ongoing development of new loyalty features and experiences, helping us build stronger, more lasting relationships with our guests. We've seen strong momentum since the launch of our Reimagine Loyalty program, with sales through the program up 340 basis points as a percentage of total revenue since relaunch, and total membership now approaching 8 million members. Later this year, we plan to roll out the next phase of the program, including testing a new tiered structure designed to further tailor benefits to guest preferences and enhance long-term engagement. To deliver the best guest experience possible, we remain focused on our third pillar, running great restaurants, every location, every shift.

Brett Feldman: These initiatives give us valuable insights that inform the ongoing development of new loyalty features and experiences helping us build stronger more lasting relationships with our guests.

Brett Feldman: We've seen strong momentum since the launch of our re imagine loyalty program with sales through the program up 340 basis points as a percentage of total revenue since relaunch and total membership now approaching 8 million members.

Brett Feldman: Later this year, we plan to rollout the next phase of the program, including testing a new tiered structure designed to further tailor benefits to guest preferences and enhanced long term engagement.

Brett Feldman: To deliver the best guest experience possible, we remain focused on our third pillar running great restaurants every location every shift.

Brett Schulman: Consistency, efficiency, quality, and hospitality are integral to our operations, and we continue to invest in initiatives that elevate performance in each of these areas. At the center of it all are our team members. We're committed to enhancing, not replacing the human experience, which is why we rolled out a new labor deployment and scheduling model late last year. We are continuing to see improved productivity across both day parts. As restaurants grow more comfortable with the tool, they are refining and optimizing, with the opportunity to drive even greater efficiencies and productivity across the system. Additionally, we're continuing to make steady progress on our Connected Kitchen Initiative.

Brett Feldman: Consistency efficiency quality and hospitality are integral to our operations and we continued to invest in initiatives that elevate performance in each of these areas at.

Brett Feldman: At the center of it all our team members, we're committed to enhancing not replacing the human experience, which is why we rolled out a new labor deployment and scheduling model late last year.

Brett Feldman: We are continuing to see improved productivity across both day parts as.

Brett Feldman: As restaurants grow more comfortable with the tool they are refining and optimizing with the opportunity to drive even greater efficiencies and productivity across the system.

Brett Feldman: Additionally, we're continuing to make steady progress on our connected kitchen initiative.

Brett Schulman: As shared during our last call, we plan to roll out our new kitchen display system to 250 restaurants by year-end. We're currently live in 42 locations and are continuing to see improvements in guest satisfaction scores driven by better digital accuracy and more proactive guest communication. Another promising advancement under our Connected Kitchen platform is our AI video technology which recently completed its test and learn phase and is live in four restaurants. This system currently supports our teams in two critical ways. The Grill Assistant helps grill cooks determine how much food to prepare based on real-time depletion data cross-referenced with historical data, while Prep Assistant equips our teams with actionable insights to make more informed and accurate prep production.

Brett Feldman: As shared during our last call we plan to rollout our new kitchen display system to 250 restaurants by year end. We're currently live in 42 locations and are continuing to see improvements in guest satisfaction scores driven by better digital accuracy and more proactive guest communications.

Brett Feldman: Another promising advancement under our connected kitchen platform is our AI video technology, which recently completed its test and learn phase and is live in four restaurants.

Brett Feldman: This system currently supports our teams in two critical ways. The gorilla assistant helps grill cooks determine how much food to prepare based on real time depletion data cross referenced with historical data, while prep assistant equips, our teams of actionable insights to make more informed and accurate prep production.

Brett Schulman: Finally, our fourth pillar, operate as a high-performing team, is foundational to everything we do. A great guest experience at Cava begins with a great team. We remain deeply committed to building a workplace that fosters growth, leadership, and long-term career development.

Brett Feldman: Finally, our fourth pillar operate as a high performing team is foundational to everything we do.

Brett Feldman: Great guest experience at Cava begins with a great team.

Brett Feldman: We remain deeply committed to building a workplace that fosters growth leadership and long term career development.

Brett Schulman: Nothing brings our commitment to developing future leaders to life more vividly than our restaurant leader conference, Cava Connect, which took place just last week. This year's theme was Ignite, a reflection of the passion, purpose, and momentum driving our teams forward. Over three days of recognition, celebration and learning, we laid the foundation for an expanded training journey from team member to general manager, further building on our Academy GM network and laying the groundwork for a deeper role ready leadership bench. We're already beginning to see the power of this approach in leaders like Dani Morales, whose journey with Cava began as a grill cook at our VCU location in Richmond, Virginia.

Brett Feldman: And nothing brings our commitment to developing future leaders to life more vividly than a restaurant leader conference Carver connect which took place just last week.

Brett Feldman: This year's theme was ignite a reflection of the passion purpose and momentum driving our team's forward.

Brett Feldman: Over three days of recognition celebration and learning we laid the foundation for an expanded training journey from team member to General manager further building on our Academy GM network and laying the groundwork for a deeper role ready leadership bench.

Brett Feldman: We're already beginning to see the power of this approach and leaders like Danny morale us whose journey with Carver began as a grill cook at our VCU location in Richmond, Virginia through grid heart and a commitment to growth. She rose through the ranks opening 14 restaurants, and now serving as an academy GM with our sight set on Multiunit leadership.

Brett Schulman: Through grit, heart, and a commitment to growth, she rose through the ranks, opening 14 restaurants, and now serving as an Academy GM with her sights set on multi-unit leadership. Along the way, she's developed future leaders of her own, including a former grill cook who now runs the very restaurant where she started. Danny's story is a testament to the depth of talent within our system and the impact of investing early and often in our people.

Brett Feldman: Along the way she is develop future leaders of our own including a former grill Cook, who now runs the very restaurant, where she started.

Brett Feldman: Danny story is a testament to the depth of talent within our system and the impact of investing early and often and our people.

Brett Schulman: We look forward to sharing more on our broader talent development strategy in the coming quarter.

Brett Feldman: We look forward to sharing more on our broader talent development strategy in the coming quarters.

Brett Schulman: Before I turn the call over, I want to thank our teams across the country for delivering another strong quarter while staying rooted in our mission. In times of uncertainty, our ability to lead with purpose, innovation, and long-term focus matters more than ever. As we move forward, we remain committed to offering bold, healthful food, providing flexible and convenient ways to engage with our brand, and most importantly, keeping the human connection that we are known for at the center of everything we do.

Brett Feldman: Before I turn the call over I want to thank our teams across the country for delivering another strong quarter, while staying rooted in our mission in times of uncertainty our ability to lead with purpose innovation and long term focus matters more than ever as we move forward, we remain committed to offering bold healthful food provide.

Brett Feldman: <unk> flexible and convenient ways to engage with our brand and most importantly, keeping the human connection that we're known for at the center of everything we do with that I'll, let Patricia walk you through the financials.

Tricia Tolivar: With that, I'll let Tricia walk you through the finances. Thanks Brett. Cava revenue in the first quarter of 2025 grew 28.2% year over year to $328.5 million. Cava same restaurant sales increased 10.8% driven by traffic growth of 7.5%. On a three-year stack basis, same restaurant sales increased 41.5 percent, driven by traffic growth of 24.7 percent. During the quarter, we opened 15 net new Cava restaurants, bringing our total Cava restaurant count to 380,000. We are pleased with our new restaurant openings, which are exceeding expectations in both top line and margin performance. Cava restaurant level profit in the first quarter was $82.3 million, or 25.1% of revenue, versus $64.6 million, or 25.2% of revenue in the first quarter of 2024, representing a 27.4% Cava's food, beverage, and packaging costs were 29.3% of revenue, higher than the first quarter of 2024 by 110 basis points due to the impact of stake.

Patricia: Thank you Brad kind of a revenue in the first quarter of 2025 grew 28, 2% year over year to $328 5 million.

Patricia: The same restaurant sales increased 10, 8% driven by traffic growth of seven 5%.

Patricia: And three year stack basis same restaurant sales increased 41, 5% driven by traffic growth of 24, 7%.

Patricia: During the quarter, we opened 15 net new restaurants, bringing our total Carver restaurant count to 380 team we.

Patricia: We are pleased with our new restaurant opening maturing exceeding expectations in both topline and margin performance.

However restaurant level profit in the first quarter with ADT, <unk> 3 million or 25, 1% of revenue versus $64 6 million or 25, 2% of revenue in the first quarter of 2024, representing a 27, 4% increase.

Patricia: Kind of a seed beverage and packaging costs are 29, 3% of revenue higher than the first quarter of 2024 by 110 basis points.

Patricia: The impact of <unk>, Inc.

Tricia Tolivar: As a reminder, we continue to expect the approximate 100 basis point year-over-year comparative impact on food, beverage, and packaging costs from stake to roll off by December. Covid labor and related costs were 25.7% of revenue, a decrease of approximately 30 basis points from the first quarter of 2024. This decrease reflects leverage from higher sales, partially offset by investments in our team member wages of 3%. Cava occupancy and related expenses were 7.4% of revenue, an improvement of 60 basis points from the first quarter of 2024, driven by increased sales revenue.

Patricia: A reminder, we continue to expect the approximate 100 basis point year over year comparative impact on food beverage and packaging costs from steak to roll off.

Patricia: Thank you.

Patricia: Labor and related costs were 25, 7% of revenue a decrease of approximately 30 basis points from the first quarter of 2024. This decrease reflects leverage from higher sales, partially offset by investments in our team member wages of 3%.

Patricia: However, occupancy related expenses were seven 4% of revenue an improvement of 60 basis points from the first quarter of 2024, driven by increased sales flat rates.

Tricia Tolivar: Cava. Other operating expenses were 12.5% of revenue, an improvement of 20 basis points from the first quarter of 2024, driven by sales leverage, partially offset by investments in the integrity of our physical spaces in support of our increased restaurant volume. Shifting to overall performance, our general and administrative expenses for the quarter, excluding stock-based compensation, were 10.5% of revenue, compared with 11.1% of revenue in Q1 of 2024. This 60 basis point improvement was driven by leverage from higher sales, partially offset by investments to drive future growth. Pre-opening expenses were $4.5 million in the quarter, compared with $3.4 million in the prior year quarter.

However, other operating expenses were 12, 5% of revenue an improvement of 20 basis points from the first quarter at 2024, driven by sales leverage partially offset by investments and the integrity of our physical space in support of our increased restaurant volume.

Patricia: Shifting to overall performance, our general and administrative expenses for the quarter, excluding stock based compensation or 10, 5% of revenue compared with 11, 1% of revenue in Q1 of 2024.

Patricia: This 60 basis point improvement was driven by leverage from higher sales, partially offset by investments to drive future growth.

Patricia: Pre opening expenses were $4 5 million in the quarter compared with $3 4 million in the prior year quarter. The one $1 million increase includes the impact of the timing of projects. In addition to opening and higher rent geography.

Tricia Tolivar: The $1.1 million increase includes the impact of the timing of projects, in addition to opening, and higher rent geography. Adjusted EBITDA for the quarter was $44.9 million, a 34.6% increase versus the first quarter of 2024. The increase in adjusted EBITDA was primarily driven by the number of and continued strength in new restaurant openings, 10.8% CAVA same restaurant sales growth, and leverage in general administrative expenses. Equity-based compensation was $6.7 million in the first quarter, compared with $5.2 million in the prior year quarter. The increase was primarily due to payroll taxes associated with RSU vesting in Q1.

Adjusted EBITDA for the quarter with $44 9 million, a 34, 6% increase versus the first quarter of 2024.

Patricia: The increase in adjusted EBITDA was primarily driven by the number and continued strength in new restaurant opening 10, 8% same restaurant sales growth.

Patricia: And leverage in general and administrative expenses.

Patricia: Equity based compensation was $6 7 million in the first quarter compared with $5 2 million in the prior year quarter. The increase was primarily due to payroll taxes associated with RSV vesting in Q1.

Tricia Tolivar: We expect full-year equity-based compensation to be between $20 million and $22 million, which includes 2025 grants with the remaining expense spread relatively even over the rest For more information visit www.FEMA.gov In the first quarter, our effective tax rate was a benefit of 26% due to the impact of equity-based compensation, which includes a net benefit of $10.7 million associated with stock-based compensation. For the full year fiscal 2025, we now expect our effective tax rate to be between 14 and 18%, with an additional discreet benefit from equity based compensation in Q2 of approximately 1 to 2 million.

Patricia: Full year equity based compensation to be between 20 million and $22 million, which includes 2025 grant with the remaining expense spread relatively evenly over the rest of the year.

Patricia: In the first quarter, our effective tax rate was a benefit of 26% due to the impact of equity based compensation, which includes a net benefit of $10 $7 million associated with stock based compensation.

Patricia: For the full year fiscal 2025, we now expect our effective tax rate to be between 14, and 18% with an additional discrete benefit from equity based compensation in Q2 of approximately $1 2 million.

Tricia Tolivar: Our cash taxes will continue to be immaterial until we fully utilize our net operating loss. During the first quarter, we reported $25.7 million of GAAP net income compared to $11.9 million of adjusted net income in Q1 of 2024. Diluted EPS was $0.22 in the first quarter compared with adjusted diluted EPS of $0.10 in the first quarter of 2024.

Our cash taxes will continue to be immaterial until we fully unified our net operating losses.

Patricia: During the first quarter, we reported $25 $7 million of GAAP net income compared to $11 9 million of adjusted net income in Q1 of 2024 diluted EPS was <unk> 22 in the first quarter compared with adjusted diluted EPS of <unk> 10.

Patricia: In the first quarter of 2024.

Tricia Tolivar: Turning to liquidity. At the end of the quarter, we have zero debt outstanding, $369.4 million in cash and investments, and access to a $75 million undrawn revolver with an option to increase our liquidity if needed. Note that during the current quarter, we launched an $80 million investment portfolio consisting of fixed income securities in order to optimize interest income over the long term, which was funded with cash on hand.

Patricia: Turning to liquidity at the end of the quarter, we had zero debt outstanding $369 4 million in cash and investments and access to a $75 million undrawn revolver with an option to increase our liquidity if needed.

Patricia: Note that during the current quarter, we launched an $80 million investment portfolio, consisting of fixed income securities in order to optimize interest income over the long term, which was funded with cash on hand.

Tricia Tolivar: Cash flow from operations for the first quarter of 2025 was $38.6 million, compared with $38.4 million during Q1 of 2024. Cash flow during the first quarter was $2.7 million.

Patricia: Cash flow from operations for the first quarter of 2025 with $38 6 million compared with $38 4 million. During Q1 of 2020 for free cash flow during the first quarter with $2 7 million.

Tricia Tolivar: Now for our outlook for full year 2025. We expect the following Sixty-four to sixty-eight net new Cava Restaurant open. Cava's same restaurant sales growth of 6% to 8%. Cava restaurant level profit margin between 24.8% and 25.2%. Pre-opening costs between $14.5 million and $15.5 million, and adjusted EVADOT, including the burden of pre-opening costs between $152 million and $159 million.

Patricia: Now for our outlook for full year 2025, we expect the following.

Patricia: 64 to 68, net new Carbo restaurant opening.

Patricia: Same restaurant sales growth of 6% to 8%.

Patricia: Kind of a restaurant level profit margin between 24, 8% and 25, 2%.

Patricia: Preopening costs between $14 5 million and $15 5 million.

Patricia: And adjusted EBITDA, including the burden of Preopening costs between $152 million and $159 million.

Tricia Tolivar: I want to share a few additional thoughts related to our latest outlook. Our guidance reflects both the evolving macroeconomic landscape and the strengths we're seeing in our business. Our consumer remains resilient, and we believe that momentum is appropriately captured in our outlook. Our unit economic model remains a core strength and we're committed to making disciplined investments that support long-term sustainable growth. Turning to same-restaurant sales, we continue to anticipate 6 to 8 percent growth for the year. As noted last quarter, we believe the most meaningful way to assess performance on a normalized basis is through a three-year stack, which better captures the dynamic trends of recent years.

Patricia: I wanted to share a few additional thoughts related to our latest outlet.

Patricia: Our guidance reflects both the evolving macroeconomic landscape and the strength, we're seeing in our business.

Patricia: Our consumer remains resilient and we believe that momentum is appropriately captured in our outlook.

Patricia: Unit economic model remains a core strength and are committed to making disciplined investments that support long term sustainable growth.

Patricia: Turning to same restaurant sales, we continue to anticipate 6% to 8% growth for the year as noted last quarter. We believe the most meaningful way to assess performance on a normalized basis is through a three year stack, which better captures the dynamic trends of recent years.

Tricia Tolivar: We expect this metric to remain strong in the high 30s for the remainder of 2025.

Patricia: We expect this metric to remain strong in the high <unk> for the remainder of 2025.

Tricia Tolivar: Turning to restaurant-level margin. As previously mentioned, we implemented an approximate 1.7% in-restaurant menu price adjustment in early January and continue to have no plans for additional increases, despite ongoing macroeconomic uncertainty. We remain vigilant in monitoring our supply chain, including any potential impacts related to tariffs. That said, our exposure remains limited based on the current policies, which are fluid, given that the majority of our ingredients are domestically sourced or covered under existing contracts. In addition, we've implemented mitigation tactics to further minimize the overall impact.

Patricia: Turning to restaurant level margin.

Patricia: As previously mentioned, we implemented an approximate one 7% in restaurant menu price adjustment in early January and continue to have no plans for additional increases despite ongoing macroeconomic uncertainty.

Patricia: We remain vigilant in monitoring our supply chain, including any potential impacts related to tariffs.

Patricia: That said our exposure remains limited based on the current policies, which are fluid given that the majority of our ingredients are domestically source for covered under existing contracts.

Patricia: In addition, we have implemented mitigation tactics.

Patricia: Theyre minimize the overall impact.

Tricia Tolivar: Before we wrap, I want to take a moment to reflect on the energy and purpose we felt coming out of Cava Connect brought to life so clearly in the story Brett shared today, with a powerful reminder of the impact our teams can have when they're inspired, supported, and united by a shared mission. That momentum is carrying us forward, and it gives us great confidence in the future we're building together.

Patricia: Before we wrap our clients take a moment to reflect on the energy and purpose, we felt coming out of comic connect brought to life. So clearly in the story Brett shared today with a powerful reminder of the impact our teams can have when they're inspired.

Patricia: Jordan and United by a shared mission.

Patricia: That momentum is carrying us forward and it gives us great confidence in the future we're building together.

Operator: Now I will turn the call back over to the operator and open it up for Q&A. Thank you.

Speaker Change: Now I will turn the call back over to the operator and open it up for Q&A.

Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question. Please press Star then the number one on your telephone keypad. If you would like to withdraw your question. Please press the pound key.

Operator: Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star then the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key.

Operator: Kindly be reminded to limit your questions to one at a time. Should you have any follow-up questions, please feel free to recue. Again, if you would like to ask a question, please press star to the number one on your telephone keypad.

Speaker Change: Hi, I'm going be reminded to limit your questions to one at that time should you have any follow up questions. Please feel free to requeue.

Speaker Change: Again, if you would like to ask a question. Please press star to the number one on your telephone keypad.

Sharon Zackfia: Our first question comes from the line of Sharon Zackfia from William Blair. Your line is open. Yeah, good afternoon. Thanks for taking the question. And congratulations on continuing up the strong trends. I guess, Brett, you mentioned loyalty and a tiered structure as something that you're going to explore later this year. Could you expand on that? And maybe with the relaunch that you did last fall, what has been kind of the most meaningful driver of seeing that uptick in engagement? Thank you.

Speaker Change: Our first question comes from the line of Sharon Zackfia from William Blair. Your line is open.

Speaker Change: Yeah. Good afternoon, Thanks for taking my question and congratulations.

The strong drugs.

Speaker Change: I guess, Brian you mentioned loyalty and a tiered structure as something that youre going to explore later this year could you expand on that and maybe with the relaunch that you did last fall what has been kind of the most meaningful driver of seeing that uptick in engagement. Thank you.

Brett Schulman: Yeah, hi, Sharon, thanks for the question. We're really pleased with the performance we've seen to date. And if you remember, the original goal was moving from a more transaction based SpendX, GetY to a earn in bank points model that would drive greater engagement and participation in the program. And that's what we're seeing. So you looked at our lower frequency or mid tier frequency users, and we we lowered the entry reward hurdle, and that has gotten those users more engaged. It's allowed us to really be able to communicate in a more personalized way. To offer delight moments like the the Peter chip moment that we talked about on the prepared remarks.

Brian: Yeah, Hi, Sharon Thanks for the question, we're really pleased with the performance we've seen to date and if you remember the original goal was moving from a more transaction based spend X get wide to earn and bank points model that would drive greater engagement and participation in the program and Thats what were seeing so you looked at our lower frequency or mid tier.

Brian: <unk> users and we lowered the entry reward hurdle and that has gotten those users more engaged it's allowed us to really be able to communicate in a more personalized way to offer delight moments like the Peter chip moment that we talked about on the prepared remarks, and so that's driven 340 basis points of.

Danilo Gargiulo: And so that's driven 340 basis points of improvement of revenue coming through the loyalty program. What we're looking to do later this year is roll out the second phase of this loyalty journey with a tiered structure that builds upon our base structure that we launched last fall, and that's to further recognize and have our guests feel seen for their passion and their frequency in visiting Cava and add increased benefits and rewards recognition to those tiers based on their frequency patterns. So excited to build upon all the success we've had to date, and we're seeing that every week where we are pushing north of 50,000 registrations per week into the program.

Brian: <unk> of revenue coming through the loyalty program.

Brian: We're looking to do later this year as rollout the second phase of this loyalty journey with a tiered structure that builds upon our base structure that we launched last fall and Thats to further recognize and have our guests feel scene for their passion and their frequency.

Brian: Visiting cava and add increased benefits and rewards recognition to those tiers based on their frequency patterns. So excited to build upon all the.

Brian: The success, we've had to date and we're seeing that every week, where we are pushing north of 50000 registrations per week into the program. So we're about 8 million loyalty members total to date and Thats growing every day.

Danilo Gargiulo: So we're about 8 million loyalty members total to date, and that's growing every day.

John Ivankoe: Our next question comes from the line of Danilo Gargiulo from Bernstein. Your line is open.

Speaker Change: Our next question comes from the line of <unk> from Bernstein. Your line is open.

Sagar Gargiulo: Hey, hi, this is Sagar here on behalf of Danilo. You mentioned that the KDS rollout is on track with 42 stores now having KDS. Can you talk on what's the impact of KDS on throughput, especially between the stores where it has been rolled out versus the rest of the system? And then taking a step back, what is driving the throughput differences among your stores, especially among the top decile and the bottom decile? Is it given by location, store manager experience, team staffing levels, or what not? And is there a plan to bridge this difference and improve throughput in the near to medium-term?

Speaker Change: Yes, Hi, this is <unk> on behalf of downloads.

Speaker Change: You mentioned about the <unk> rollout is on track.

Speaker Change: 42 stores now having <unk>.

Speaker Change: Can you talk on what's the impact of <unk> on throughput.

Speaker Change: Especially within the stores.

Speaker Change: It has been rolled out versus the rest of the system.

Speaker Change: And then taking a step back what is driving the toolkit differences among among your stores.

Speaker Change: Amongst the top decile in the bottom decile.

Speaker Change: Is it driven by locations globally Experian, Steve stocking levels or whatnot, then is that a plan to bridge this difference and improved in.

Speaker Change: The near to medium term.

Brett Schulman: Yeah, I'll take the first part of your question and hand it over to Tricia for the second part of your question. As it relates to the KDS, we don't give specific throughput or productivity numbers, but what we can say is that the new kitchen display screen systems allow for much richer, deeper order management capabilities, including increased productivity. So we have throttling capabilities on the back end that allow restaurants to manage how many orders they receive every 15 minutes. And these screens allow them the capacity and ability to open up those throttles to a greater degree.

Speaker Change: Yeah I'll take the first part of your question and then hand, it over to Tricia for the second part of your question.

Speaker Change: As it relates to the KBS.

Speaker Change: We don't give specific throughput our productivity numbers, but what we can say is that the new kitchen display screen systems allow for much richer deeper order management capabilities, including increased productivity. So we have throttling capabilities on the backend that allow restaurants to manage how many orders they receive every 15 minutes.

And these screens allow them the capacity and ability to open up those throttles to a greater degree and most importantly deliver improved order accuracy and guest experience scores as what we're seeing in the test restaurants. So we've expanded the rollout from 25 to <unk> 42, and we're accelerating that over the next few weeks working towards our goal of 200.

Brett Schulman: And most importantly, deliver improved order accuracy and guest experience scores is what we're seeing in the test restaurant. So we've expanded the rollout from 25 to 42, and we're accelerating that over the next few weeks, working towards our goal of 250 restaurants by the end of the year. And regarding differences between restaurants when we look at them in rank order based on AUV, it's interesting to point out that our top decile of restaurants from an AUV perspective have representation from all parts of the country, from all types of formats, from all income strata, so there really isn't one thing that is creating those large volumes.

50 restaurants by the end of the year.

Speaker Change: And regarding differences between restaurants, so when we look at them in rank order based on AAV.

Speaker Change: It's interesting to point out that our top decile of restaurants from an AUR perspective have representation from all parts of the country from all types of formats from all income strata. So there really isn't one thing that is creating the large volumes certainly speed and service are components that help on the one thing we.

Brett Schulman: Certainly speed and service are components that help. The one thing we do tend to find is a much evenly spread demand throughout the day, fewer shoulder periods, so more of an even distribution. guests visiting our restaurants throughout the day. When we look at our restaurants based on quartiles, the bottom quartile of restaurants have younger restaurants in them overall. So it's really more of a maturation cycle than it is anything else in bringing those restaurants to the average and above average AUVs that we're able to deliver. The top quartile of our restaurants, in fact, have AUVs above $4 million and deliver restaurant level margins of over 30%, which really just amplifies and demonstrates the power of this model and the opportunity we have to bring more and more Cavas across the country and also the restaurant level margins that we produce.

Speaker Change: Do you tend to find is a much evenly spread demand throughout the day fewer shoulder period.

Speaker Change: More of an even distribution of gas.

Speaker Change: Guests visiting our restaurants throughout the day, when we look at our restaurants based on quartile the bottom quartile of restaurants have younger restaurants in them. Overall, so it's really more of a maturation cycle than it is anything else and bringing those restaurants to the average and above average <unk> that we're able to deliver the top quartile of our restaurants.

Speaker Change: Fact, having these above $4 million and deliver restaurant level margins of over 30%, which really just amplifies and demonstrates the power of this model and the opportunity we have to bring more and more <unk> across the country and also the restaurant level margins that we produce we're able to make investments in team member.

Brett Schulman: We're able to make investments in team members and guests to drive strong traffic momentum as we move forward.

Speaker Change: <unk> and guests to drive strong PRASM traffic momentum as we move forward.

John Ivankoe: Our next question comes from the line of John Ivankoe from J.P. Morgan. Your line is open.

Sean: Our next question comes from the line of Sean <unk> from Jpmorgan. Your line is open.

Speaker Change: Yes.

Crystal: Hi, this is Crystal on for Dynamical. My question is on local slash regional supply growth. So we have seen a lot of new growth coming into many of your existing markets and like seed brands continue to grow as well. And given your multi regional success so far, could you discuss how this recent performance and some of these existing markets and how these dynamics inform your view on eventual temp of the brand? Yeah, we haven't seen any differences or market specific weakness. We noted, we've seen consistent performance across the country in all markets and in all regions.

Speaker Change: Hi, This is crystal ball Onboarding article My question is on local flash regional supply growth. So we have seen a lot of your growth coming into many of your existing markets and legacy brands continue to grow as well and giving your multi regional success. So far could you discuss how this recent performance in some of these existing markets.

Speaker Change: And how these diamond now makes inform your view on an eventual Tam of the brand.

Speaker Change: Yes, we haven't seen any differences or market specific weakness. We noted we've seen consistent performance across the country in all markets and in all regions and as it relates to your capacity comment I mean, that's that's our industry. If you look over the last 15 years traffic has been <unk>.

Brett Schulman: And as it relates to your capacity comment, I mean, that's, that's our industry. If you look over the last 15 years, traffic has been negative in the industry all but one year. And that was a bounce back coming out of the pandemic. So it has been the case for many years that you are competing for market share. And our traffic has proven over time, and the positive traffic growth we've had in recent quarters, that people are choosing Cava when they are eating out. And, you know, we have to prove every day why we are better than the three or four restaurants next to us.

Speaker Change: <unk> in the industry, all but one year and that was a bounce back coming out of the pandemic.

Speaker Change: So it has been the case for many years that.

Speaker Change: You are competing for market share and our traffic has proven over time.

And the positive traffic growth we've had in recent quarters that people are choosing carver when they are eating out and we have to prove every day why we are better than the three or four restaurants next to us and we've been able to do that in recent quarters and I would also add that when you look across the country.

Brett Schulman: And we've been able to do that in recent quarters. And I would also add that when you look across the country, we do not have a region that has an average unit volume below 2.6 million. So we have strong AUVs across all regions, as we noted, even when we went public, that has continued to be the case and continue to grow over time across the country.

Speaker Change: We do not have a region that has an average unit volume below $2 6 million. So we have strong <unk> across all regions as we noted even when we went public.

Speaker Change: That has continued to be the case and continue to grow over time across the country.

Speaker Change: Okay.

Andy Barish: Our next question comes from the line of Andy Barish from Jeffrey's, your line is open. Hey guys, I'm just wondering on the marketing, you know, innovation side is, is SpiceWorld kind of the the tentpole moment you've sort of talked about for 25? Or should we expect, you know, kind of something new on protein or flavors maybe later in the year?

Speaker Change: Our next question comes from the line of Andy Barish from Jefferies. Your line is open.

Andy Barish: Hey, guys.

Andy Barish: Just wondering on the marketing and innovation side is.

Andy Barish: In Spice World kind of.

Paul moment, you've sort of talked about for $25 should we expect.

Andy Barish: Something new on protein or flavors, maybe later in the year.

Brett Schulman: Yeah, hey, it's Brett. Thanks for the question.

Andy Barish: Yeah, Hey, it's Brett Thanks for the question no I would expect the Tentpole moment later this fall based on the progress of innovation through our stage gate process right now and it will likely be a new protein.

Tricia Tolivar: No, I would expect a tentpole moment later this fall based on the progress of innovation through our stage gate process right now, and it will likely be a new Thank you.

Speaker Change: Okay. Thank you and then.

Tricia Tolivar: Tricia, just on the pressure from, you know, the beef mix, steak mix being in place, well, I guess, what kind of, what kind of inflation are you seeing on that protein in particular? And am I close to read that the rest of the basket was relatively flat-ish if, you know, if beef contributed most of the year-over-year increase? That's fair, Andy. So the basket itself, as you know, is very diverse. And so not exposed to a lot of fluctuations on any single item in and of itself. The supply chain team has done a great job in negotiating commitments and contracts for the year that were at better rates than what we've had in the past.

Speaker Change: Tricia just on that the pressure from the beef mix.

Speaker Change: Mix being in place.

Speaker Change: Well I guess what kind of.

Speaker Change: What kind of inflation are you seeing on that protein in particular and in my close to read that the rest of the basket was relatively flattish.

Speaker Change: Steve contributed most of the year over year increase.

Speaker Change: That's fair Andy So the basket itself as you know is very diverse and so not exposed to a lot of fluctuations on any single item in and of itself. The supply chain team has done a great job in negotiating commitments and contracts for the year that we're at better rates than what we've had in the past.

Tricia Tolivar: So in the current quarter, about 100 basis points is largely stake related. And that in fact, has also been contracted through the end of the year.

Speaker Change: In the current quarter and about 100 basis points is largely stake related and that in fact has also been contracted through the end of the year.

Brian Mullan: Our next question comes from the line of Brian Mullan from Piper Sandler. Your line is open. Hi, this is Alison Arsherman for Brian Mullan. Question on menu innovation, wanted to ask about the chicken shawarma test so far. Maybe just a little background on what led up to that. Did you speak to how it's going so far? and what would the next step be? Yes, that's right. Sure. Thanks for the question. That is one of the proteins in our StageGate process, and it's testing in Dallas and Florida. And we're very pleased with the progress. And the impetus behind it, it is a staple item in the Levant region, which is really core to our Mediterranean concept essence.

Speaker Change: Our next question comes from the line of Brian <unk> from Piper Sandler Your line is open.

Allison: Hi, This is Allison <unk> on for Brian Mullan. Thank you for taking the question.

Allison: Question on menu innovation I wanted to ask about the chicken swarm of tests, so far in Texas, and California, maybe just a little background. What led you to test for specific protein and could you speak to how it's going so far from a consumer reception perspective and from an operations perspective.

Allison: And what would be from here. Thanks.

Allison: Sure. Thanks for the question that is one of the proteins in our stage gate process and it's testing in Dallas in Florida, and we're very pleased with the progress.

Allison: And the emphasis behind it it is a staple item in the Levade region, which is really core to our Mediterranean concept essence, and it is a different cut of chicken. So it spit roasted chicken breast that is complementary to our existing chicken cuts on the line. So it's a different textural experience different look and feel so.

Brett Schulman: And it is a different cut of chicken. So it's spit-roasted chicken breast that is complementary to our existing chicken cuts on the line. So it's a nice complementary addition to our protein portfolio. And it is also a very light lift on operations. It's an easy protein to produce. So we always want to be mindful when we're adding innovation to make sure we are not adding too much operational complexity. So again, pleased with what we're seeing and the consumer response to it.

Allison: We think it could be a nice complementary addition to our protein portfolio and it is also a very.

Allison: Light lift on operations, it's an easy proteins to produce so we always want to be mindful of when we're adding innovation to make sure we are not adding too much operational complexity. So.

Allison: I'm pleased with what we're seeing in the consumer response to it and if it continues on its current progression you will see it across our fleet in coming quarters.

Brett Schulman: And if it continues on its current progression, you will see it across our fleet in coming quarters.

Jeff Bernstein: Our next question comes from the line of Jeff Bernstein from Barclays. Your line is open.

Jeff Bernstein: Our next question comes from the line of Jeff Bernstein from Barclays. Your line is open.

Nisha Dat: Hi, this is Nisha Dat on for Jeff Bernstein. I wanted to ask a question on restaurant margins. The 2025 guidance is consistent with 2024 restaurant margins in the 25% range, which is well above the 20% you spoke of just two years ago.

Speaker Change: Hi, This is Michelle on for Jeff Bernstein.

Speaker Change: Wanted to ask a question on restaurant margins.

Speaker Change: 2025 guidance is consistent with 2024 restaurant margins in the 25% range, which is well above the 20% you spoke of just two years ago.

Tricia Tolivar: So I wanted to ask how do you prioritize upside drivers and is there ability to expand from here or to reinvest? Yeah, thank you for the question, I appreciate that. Certainly the significant improvement in AUVs helps create a lot of that expansion in restaurant level margins, but we're also very mindful of where we are in our growth and development and wanna make sure that we're continuing to reinvest in the business through team members and guests. And some examples of that is making sure that we're appropriately compensating our team members both in wage and benefits. And so we review that every quarter and adjust this as needed so that we're a best in class employer in each and every market.

Speaker Change: Had to ask how do you.

Speaker Change: <unk> upside drivers and is there ability to expand from here or to reinvest.

Speaker Change: Yes. Thank you for the question I appreciate that.

Speaker Change: Certainly the significant improvement in <unk> helps create a lot of that expansion in restaurant level margins, but we're also very mindful of where we are in our growth and development and want to make sure that we're continuing to reinvest in the business.

Speaker Change: Through team members and guests and some examples of that is making sure that we're appropriately compensating our team members both in wage and benefit from so we review that every quarter and adjusted as needed. So that we're best in class employer in each and every market and then also being very thoughtful and mindful around menu price increases.

Tricia Tolivar: And then also being very thoughtful and mindful around menu price increases. So over the years, we've been very limited in those menu price increases from the end of 2019 to the end of 24, we raised menu prices about 15% and CPI went up 23%. So that's eight points less than that. And as you know, fast food went up over 30%. So that's an example of an investment in our guests that we think is important and helps fuel that traffic momentum that we've been able to deliver.

Speaker Change: The years, we've been very limited and those menu price increases from the end of 2019 to the end of 'twenty four we raised menu prices about 15% in CPI went up 23%. So that's eight points less than that and as you know fast food went up over 30%. So that's an example of an investment.

Speaker Change: In our guests that we think is important and help fuel that traffic momentum that we've been able to deliver.

Chris O'Call: Our next question comes from the line of Chris O'Call from Stifel. Your line is open. Great. Thanks, guys. This is Patrick on for Chris.

Speaker Change: Our next question comes from the line of Chris <unk> from Stifel. Your line is open.

Speaker Change: Okay.

Patrick: Great. Thanks, guys. This is Patrick on for Chris Britt I was hoping maybe you could provide a little bit of additional color on the.

Brett Schulman: Brett, I was hoping you maybe could provide a little bit of additional color on the You're seeing in the labor deployment model. Specifically, I think you mentioned that, you know, there were some additional opportunities for specific restaurants in certain situations to even drive more improvement there. So I was curious if you could expand on that and maybe what those are and, you know, is there any way that you can also frame up how much you have been able to reinvest back into the restaurants? I think you may have just touched on it a little bit in the previous question, but expand a bit on maybe what form that reinvestment is taking specifically for those of you.

Patrick: The success Youre seeing in the labor deployment model.

Patrick: Typically I think you mentioned that there were some additional opportunities for specific restaurants in certain situations even drive more improvement. There. So I was curious if you could expand on that and maybe what those are.

Patrick: Is there any way that you can also frame up how much you had been able to reinvest back into the restaurants.

Patrick: I think you may have just touched on it a little bit previous question, but expand a bit on maybe what form that reinvestment has taken specifically for those initiatives.

Patrick: Okay.

Brett Schulman: Yeah, we, we haven't quantified any kind of specific numbers. But what we can say is we have seen productivity enhancements, improvements over both lunch and dinner. And as it pertains to the opportunity, when we rolled this out, we rolled out the base labor deployments. And now it's really honing the, the adoption of it and refining the deployment. So people really adhere, our teams adhere to the processes. And we see it when it's used, as intended, driving significant enhancements. And then we have others that are still working to get into those deployments. And that's the opportunity we have going forward.

Patrick: Yes.

Patrick: We haven't quantified any kind of.

Specific numbers, but what we can say is we have seen productivity enhancements improvements over both lunch and dinner.

Patrick: As it pertains to the opportunity when we rolled this out we rolled out the base labor deployments and now it's really honing the.

Patrick: The adoption of it and refining the deployments so people really adhere our teams adhere to the processes.

Patrick: And we see it when it's used as intended driving significant enhancements and then we have others that are still working to get into those deployments and that's the opportunity we have going forward. So.

Brett Schulman: So as it relates to hours, it's, and we noted this in past calls, it's more of a redistribution of hours. So the real intent is, A, it's to make our restaurants easier to run, so the shifts aren't as frenetic, that the teams are in position, guest facing, that our general managers are not jumping the line or jumping into the back to fill a hole or a gap to prep, that the prep is oriented before and after shifts, and that they can coach and lead the teams. And that it frees our team members up to deliver that human connection, and get out into the dining room, do table touches, have more guest facing interaction, and have a less stressful shift.

Patrick: As it relates to ours it's in.

We noted this in past calls it's more of a redistribution of hours so the real incentives.

Patrick: It's to make our restaurants easier to run so the shifts aren't as frenetic that the teams are in physician guest facing that our general managers are not jumping to align or jumping into the back to fill a hole or a gap to prep that the prep is oriented before and after shifts and that they can coach and lead the teams and then it frees our team members up to deliver.

Patrick: For that human connection and get out into the dining room do table touches have more guest facing interaction and have a less stressful shifts. So we're very pleased with what we've seen to date, but like everything we do we want to be methodical and thoughtful about it and not push our teams too hard too fast. So we're very excited with what we've seen in the initial deployments, but theres a lot of opportunity.

Brett Schulman: So we're very pleased with what we've seen to date.

Brett Schulman: But like everything we do, we want to be methodical and thoughtful about it and not push our teams too hard too fast. So we're very excited with what we've seen in the initial deployments, but know that there's a lot of opportunity to continue to lean into these deployments and drive greater productivity in the coming quarter.

Patrick: We continue to lean into these deployments and drive greater productivity in the coming quarters.

Sarah Sanatori: Our next question comes from the line of Sarah Sanatori from Bank of America. Your line is open. Thank you. Thank you for all the color today. I wanted to go back to the demand environment. You said you have momentum. There's uncertainty out there, and I guess the question is twofold. One is your 3-year stack in the quarter was actually a little bit better than that high 30. I didn't know if there was some conservativism embedded in that, holding that full year guidance. And then if some of your peers have talked about, or competitors have talked about softness in the D.

Sara Senatore: Our next question comes from the line of Sara Senatore from Bank of America. Your line is open.

Sara Senatore: Thank you and thank you for all the color today I Wonder if you go back to the demand environment.

Speaker Change: Thanks, Jim.

Speaker Change: Uncertainty out there and I guess the question is twofold one is.

Speaker Change: Your three year snack in the quarter, a reduction a little bit better than high 30.

Speaker Change: I didn't know if there was some conservatism embedded in your <unk>.

Speaker Change: Holding that for your guidance and then some of your peers have talked about competitors have talked about softness.

Sarah Sanatori: C. area, where I know you have a fairly big footprint, we've heard maybe softness in the lunchtime day part. Any variation that you have seen that might be some kind of leading indicator in your business, just any kind of color you can give on that. Thanks.

Speaker Change: The area, where you I know you have a family.

Speaker Change: Brian.

Speaker Change: Maybe softness in the lunch day part.

Speaker Change: Our nation that you have seen that Mike.

Speaker Change: Some kind of a leading indicator.

Speaker Change: Yes.

Speaker Change: In Europe in your business.

Speaker Change: Any kind of color you can give.

Speaker Change: On that thanks.

Sarah Sanatori: Thanks, Sarah. So our guidance reflects the fluidity of the macroeconomic environment. We know that there are stronger headwinds and consumers are feeling challenged. But there really isn't anything that we're seeing in our data in Q1 that would suggest that, and I'll get to that in a minute. The one thing, though, to keep in mind is, as you called out, we're reiterating that we believe we can deliver a three-year stack in the high 30s, which is what we shared at the end of the year. But keep in mind that as we go into the second half of the year, we'll be lapping stake as part of our prior year offering.

Sarah: Thanks Sarah.

Speaker Change: So our guidance reflects the fluidity of the macroeconomic environment, we know that our stronger headwinds and consumers are feeling challenged.

Speaker Change: Really isn't anything that we're seeing in our data in Q1 that would suggest that and I'll get to that in a minute. The one thing though to keep in mind is as you've called out we're reiterating that we believe we can deliver a three year stack in the high <unk>, which is what we shared at the end of the year, but keep in mind that as we go into the second half of the year, we'll be lapping stake as part of our prior year.

Sarah Sanatori: So that will be something that we'll be mindful of. As Brett said, we follow our stage gate process, so we're not going to manufacture anything to try to lap something that happened in the past, because we think what we're focused on is the long-term opportunity and what drives consumer behavior in general. As it relates to the data and what we have been seeing, nothing in our data suggests that our consumers challenge, as I mentioned a minute ago. Our premium attachment continues to be high, P2Ship, for example, continues to increase in incidence, as does some of our other premium items, including steak.

Offering so that that will be something that we'll be mindful of.

Brent said, we follow our stage gate process, so we're not going to manufacture or anything to try to lap something that happened in the past because we think what we're focused on is the long term opportunity and what drives consumer behaviour in general as it relates to the data and what we have been seeing nothing in our data suggests that our consumers challenges.

Speaker Change: Mentioned a minute ago, our premium attachment continues to be high Pita chips. For example continues to increase in incidents as does some of our other premium items, including stake are our per person average continues to increase.

Sarah Sanatori: Our per-person average continues to increase. And we have positive traffic across all geographies, all income strata, all formats, and all day parts. So when we look at the geographies, we do a deeper dive into the district because there have been lots of questions about DOJ and the potential impact, and we haven't seen anything in those markets. As well as lunch and dinner, we're seeing consistent strengths across both day parts, so there's been no fluctuation in our restaurants as it relates to that. And when you think about income strata, I mentioned the consistency, and our bottom income stratas are actually outperforming, which is something we shared before, and we're continuing to see that trend.

Speaker Change: And we have positive traffic across all geographies all income strata all formats in all day parts. So when we look at the geographies, we do a deeper dive into the district, because there've been lots of questions about <unk> and the potential impact and we haven't seen anything in those markets as well as lunch and dinner, we're seeing consistent strength across.

Speaker Change: Both day parts, so theres been no fluctuation in our restaurants as it relates to that and when you think about income strategy I mentioned, the consistency and our bottom income stratas are actually outperforming on which is something we shared before and we're continuing to see that trade that that trend.

Sarah Sanatori: At the end of the day, what we want to do is make sure we're delivering an incredible value and a wonderful experience for our guests with great hospitality, because we know these times are very challenging and consumers have to make choices, and what we want to make sure is they choose Cava when they have a meal out.

Speaker Change: Trends at the end of the day, what we want to do is make sure we're delivering incredible value and wonderful experience for our guests with great hospitality, because we know these times are very challenging and consumers have to make choices and what we want to make sure that they choose <unk> when they have a meal out.

David Tarantino: Our next question comes from the line of David Tarantino from where your line is open. Hi, good afternoon. Can I just clarify maybe that last question? I think you're projecting the three year stack comps in the high 30s, which is, you know, very good number and implies good numbers for this year. But it is lower than what you did in the first quarter. So I just want to understand, you know, if that's something you're already seeing in the business, or you're just leaving yourself some room given all the uncertainty.

Speaker Change: Our next question comes from the line of David Tarantino from Baird. Your line is open.

David Tarantino: Hi, good afternoon.

Speaker Change: Can I just clarify maybe the last question I think.

Speaker Change: Sure.

Speaker Change: Projecting the three year stack comps in the high <unk>, which is a very good number it implies good numbers for this year, but.

Speaker Change: It is lower than what you did in the first quarter. So I just wanted to understand if that's something you're already seeing in the business or are you just leaving yourselves some room given all the uncertainty.

David Tarantino: And then I guess my real question is, I was hoping you could comment on the performance for the brand and some of the newer markets that you entered. I think you mentioned Indiana and Miami. So I was wondering if you could comment on the reception in those markets as well. Thanks.

Speaker Change: And then I guess my real question is I was hoping you could comment on the performance for the brand in some of the newer markets.

Speaker Change: I think you mentioned, Indiana in Miami, So I'm wondering if you could comment on the reception in those markets as well. Thank you.

David Tarantino: Thanks, David.

David Tarantino: Thanks, David So just as a reminder, our quarter ended April 20 or.

Brett Schulman: So just as a reminder, our quarter ended April. So much of what. The other thing that you asked about was performance of new markets. We're seeing great results in all of our restaurants that are opening across the country in 2025, very similar to the openings in 2023 and 2024, if not better. So in Indianapolis and Fishers, that restaurant's performing very well, as well as our restaurants in South Florida. But take our restaurant in Lafayette, Louisiana, that's exceeding expectations too. It's just really demonstrating the power of the brand and our ability to really expand to many other places across the country and leverage that enormous white space opportunity that's ahead of us.

Speaker Change: So much of what.

Speaker Change: We're hearing about so post liberation day is really reflected in our results already and so that has been captured in our guidance reflects what we saw in Q1 through April 20th and what we're currently seeing in the business and we believe we can deliver a three year stack of the high thirties.

The other thing that you asked about was performance of new market.

Speaker Change: We're seeing great results in all of our restaurants that are opening across the country in 2025 very soon.

Speaker Change: Similar to the openings in 'twenty, three and 'twenty four if not better so in Indianapolis and fissures that restaurant is performing very well as well as our restaurants in south, Florida, but take a restaurant in Lafayette, Louisiana that exceeding expectations too and it's just really demonstrating the power of the brand and our ability to really expand.

Speaker Change: Many other places across the country and leverage that enormous white space opportunity. That's ahead of us.

Speaker Change: Okay.

Operator: Again, if you would like to ask a question, please press start and the number 1 on your telephone keypad.

Speaker Change: Again, if you would like to ask a question. Please press Star then the number one on your telephone keypad.

Andrew Charles: Our next question comes from the line of Andrew Charles from TV Cowen. Your line is open. Thank you.

Speaker Change: Next question comes from the line of Andrew Charles from TD Cowen Your line is open.

Zach Ogden: This is Zach Ogden on for Andrew. I just had a question on the mix. It did look like it was still solidly positive in one cue, but it did seem a little bit lower than last, say, three quarters. So are you were you expecting that? And what are you seeing driving that? So keep in mind our combined impact for price and mix includes 1.7% for many price increases, which still delivers a fairly healthy mixed impact. So I'm not seeing a significant change or deterioration there. Our premium attachments, as I mentioned, are increasing our stake incidence as strong and helping contribute to that as well.

Speaker Change: Thank you. This is Dan on for Andrew I, just had a question on the mix. It did look like it was still solidly positive in <unk>, but it did seem a little bit lower than last say three quarters or so.

Speaker Change: Are you expecting that and what are you seeing driving that.

Speaker Change: So keep in mind our.

Speaker Change: Combined impact for pricing mix includes one 7% for menu price increases, which still delivers a fairly healthy mix impact. So I'm not seeing a significant change or deterioration. There are premium attachments as I mentioned, our increasing our stake incidence is strong and helping contribute to that as well.

Zach Ogden: Alright, great, thank you.

Speaker Change: Alright, great. Thank you.

Brett Schulman: If there are no questions at this time, I would like to hand the conference over back to Brett. Please go ahead.

Speaker Change: There are no questions at this time I would like to hand, the conference over back to Brad. Please go ahead.

Speaker Change: Okay.

Brett Schulman: Thank you for joining us today. Before we wrap, I want to take a moment to acknowledge the strong start to the year and express my gratitude to our. Delivering these results while staying true to our mission is something we're incredibly proud of and it reflects the consistent focus and care of our teams that our teams bring to our business every day. This quarter, we also crossed an important milestone, surpassing $1 billion in revenue on a trailing 12-month basis. It's a meaningful moment for our company and a reflection of the strength of our category-defining Mediterranean brand.

Speaker Change: Thank you for joining us today before we wrap I want to take a moment to acknowledge the strong start to the year and express my gratitude to our team delivering these results while staying true to our mission is something we're incredibly proud of and it reflects the consistent focus and care of our teams that our teams bring to our business every day.

This quarter, we also crossed an important milestone surpassing $1 billion in revenue on a trailing 12 month basis.

Speaker Change: Meaningful moment for our company and a reflection of the strength of our category defining Mediterranean brand.

Brett Schulman: Most importantly, it's a testament to the hard work and dedication of our more than 11,000 team members.

Speaker Change: But most importantly, it's a testament to the hard work and dedication of our more than 11000 team members.

Brett Schulman: Cava is a special place because of.

Speaker Change: <unk> is a special place because of them.

Brett Schulman: Thank you again for your time.

Speaker Change: You again for your time.