Restaurant chain Cava cuts sales forecast again on uneven demand

By Anshi Sancheti

(Reuters) -Mediterranean restaurant chain Cava Group on Tuesday cut its annual same-store sales growth forecast for the second time this year, signaling sluggish spending on dining out by budget-conscious customers.

Shares of the company were down 4% after the bell.

The company expects full-year same-restaurant sales to rise between 3% and 4%, down from its prior forecast of 4% to 6%.

Fast-casual brands such as Chipotle Mexican Grill and Cava have warned of margin pressures and slowing demand while fast-food chains such as Burger King and Domino's Pizza have gained from their focus on value-menu items.

Customers aged 25 to 35 are also under strain and pulling back on spending amid rising unemployment, resumed student loan payments and higher rents, Cava CFO Tricia Tolivar told Reuters, echoing comments by Chipotle executives last week.

Cava's quarterly restaurant-level profit margin fell to 24.6% from 25.6% a year earlier, partly hurt by higher food, beverage, and packaging expenses linked to tariffs.

The company also lowered its annual restaurant-level profit margin forecast to 24.4%–24.8% from 24.8%–25.2%.

"In the current quarter, there's about a 20-basis-point impact related to tariffs, largely for our imported beef that we've served to our guests every day," Tolivar said.

Revenue for the third quarter was $289.8 million, missing estimates of $292.59 million, according to data compiled by LSEG.

Cava posted quarterly earnings of 12 cents per share for the period ended October 5, compared with analysts' estimates of 13 cents.

(Reporting by Anshi Sancheti in Bengaluru; Editing by Tasim Zahid)

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