What Happened?
Shares of mediterranean fast-casual restaurant chain CAVA (NYSE: CAVA) fell 16.9% in the morning session after the company reported mixed second-quarter results and provided a full-year EBITDA forecast that fell short of Wall Street's expectations. The sharp decline occurred despite the company beating second-quarter profit expectations, as investors focused on signs of slowing demand. For the quarter, CAVA missed revenue estimates, and its same-store sales growth of 2.1% also fell short of expectations. This marked a significant deceleration from the 14.4% growth seen in the same quarter of the prior year. Looking ahead, the company's full-year adjusted EBITDA guidance of $155.5 million at the midpoint was below analyst forecasts of $159.1 million. The combination of slowing growth at existing restaurants and a weaker-than-anticipated outlook for profitability weighed heavily on investor sentiment.
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What Is The Market Telling Us
CAVA’s shares are extremely volatile and have had 30 moves greater than 5% over the last year. But moves this big are rare even for CAVA and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 12 days ago when the stock dropped 5.1% on the news that a surprisingly weak U.S. jobs report and renewed fears over international trade policy fueled concerns about a slowdown in consumer spending. The July 2025 jobs report revealed that hiring slowed dramatically, with the U.S. economy adding only 73,000 new jobs—the weakest gain in over two years. Furthermore, job numbers for May and June were revised significantly lower, suggesting the labor market is weaker than previously thought. This is a critical headwind for restaurants, as a shaky job market often leads consumers to cut back on discretionary spending like dining out. Compounding the issue, the announcement of new U.S. tariffs on trading partners has heightened fears of inflation and a broader economic slowdown, prompting investors to sell shares in consumer-facing sectors.
CAVA is down 37.7% since the beginning of the year, and at $71.78 per share, it is trading 52.4% below its 52-week high of $150.88 from December 2024. Investors who bought $1,000 worth of CAVA’s shares at the IPO in June 2023 would now be looking at an investment worth $1,639.
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