# Cava Group, Inc.: Form 10-Q for the period ended Oct 6, 2024

- Company: [Cava Group, Inc.](/companies/cava.md) (CIK 1639438)
- Form: 10-Q
- Filed: 2024-11-13
- Accepted by EDGAR: Nov 12, 2024, 17:45 ET
- Period: 2024-10-06
- Accession: 0001628280-24-047336
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1639438/000162828024047336/cava-20241006.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1639438/000162828024047336/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-10-06.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-15 to 2024-10-06 | $243.8m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-01-01 to 2024-10-06 | $736.3m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Gross profit | 3 months, 2024-07-15 to 2024-10-06 | $62.6m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2024-01-01 to 2024-10-06 | $190.4m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2024-07-15 to 2024-10-06 | $29.8m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2024-01-01 to 2024-10-06 | $92.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-07-15 to 2024-10-06 | $13.8m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-10-06 | $39.2m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-07-15 to 2024-10-06 | −$57.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-01-01 to 2024-10-06 | $482.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-07-15 to 2024-10-06 | $18.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-10-06 | $51.7m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-15 to 2024-10-06 | $0.15 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-10-06 | $0.44 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-15 to 2024-10-06 | $0.16 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-10-06 | $0.45 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-15 to 2024-10-06 | 118,430,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-10-06 | 118,191,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-10-06 | $131.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-10-06 | $80.4m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-10-06 | $367.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-10-06 | $393.3m | us-gaap:AssetsCurrent |
| Total assets | at 2024-10-06 | $1.08bn | us-gaap:Assets |
| Current liabilities | at 2024-10-06 | $134.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-10-06 | $463.1m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-10-06 | $616.4m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 36,898 characters.

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited interim condensed consolidated financial statements and the related notes included elsewhere in this Form 10-Q, and our Annual Report on Form 10-K for the year ended December 31, 2023 (our “2023 Annual Report”). In addition to historical information, this discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties, and other factors outside the Company’s control, as well as assumptions, such as our plans, objectives, expectations, and intentions. Our actual results may differ materially from those expressed or implied in the forward-looking statements as a result of various factors, including those described under the sections entitled “Cautionary Statement Concerning Forward-Looking Statements” above and “Risk Factors” in our 2023 Annual Report.*

### Overview

CAVA Group, Inc. (together with its wholly owned subsidiaries, referred to as the “Company”, “CAVA”, “we”, “us”, and “our” unless specified otherwise) was formed as a Delaware corporation in 2015, and prior to that, the first CAVA restaurant opened in 2011 in Bethesda, Maryland. The Company is headquartered in Washington, D.C. and, as of October 6, 2024, the Company operated 352 fast-casual CAVA Restaurants in 25 states and Washington, D.C. The Company’s authentic Mediterranean cuisine unites taste and health, with a menu that features chef-curated and customizable bowls and pitas. The Company’s dips, spreads, and dressings are centrally produced for use in our restaurants and to be sold in grocery stores.

### Segments

We have two reportable segments: CAVA and Zoes Kitchen. CAVA reflects the financial results of all CAVA restaurants we operate. Zoes Kitchen reflects the financial results of all Zoes Kitchen locations we previously operated. As of March 2, 2023, we no longer operate any Zoes Kitchen locations. Our CPG operations are included in Other.

### Key Performance Measures

In assessing the performance of our business, in addition to considering a variety of measures in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), our management team also considers a variety of other key performance measures, including non-GAAP measures. The key performance measures used by our management for determining how our business is performing are: CAVA Revenue, CAVA Same Restaurant Sales Growth, CAVA AUV, CAVA Restaurant-Level Profit, CAVA Restaurant-Level Profit Margin, CAVA Restaurants, Net New CAVA Restaurant Openings, CAVA Digital Revenue Mix, Adjusted EBITDA, and Adjusted EBITDA Margin.

We believe that these key financial measures provide useful information to users of our financial statements in understanding and evaluating our results of operations in the same manner as our management team. The presentation of these key performance measures, including Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP financial measures, is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. See “Non-GAAP Financial Measures” below.

The following table sets forth our key performance measures:

*($ in thousands)*

|  | Twelve Weeks Ended October 6, 2024 | October 1, 2023 | Change | Forty Weeks Ended October 6, 2024 | October 1, 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| CAVA Revenue | $241,499 | $173,759 | $67,740 | $729,173 | $541,609 | $187,564 |
| CAVA Same Restaurant Sales Growth (1) | 18.1% | 14.1% | 4.0% | 11.1% | 20.1% | (9.0)% |
| CAVA AUV (2) | $2,784 | $2,640 | $144 | $2,784 | $2,640 | $144 |
| CAVA Restaurant-Level Profit | $61,819 | $43,580 | $18,239 | $187,700 | $138,179 | $49,521 |
| CAVA Restaurant-Level Profit Margin | 25.6% | 25.1% | 0.5% | 25.7% | 25.5% | 0.2% |
| CAVA Restaurants | 352 | 290 | 62 | 352 | 290 | 62 |
| Net New CAVA Restaurant Openings | 11 | 11 | — | 43 | 53 | (10) |
| CAVA Digital Revenue Mix | 35.8% | 35.5% | 0.3% | 36.2% | 36.1% | 0.1% |
| Net income | $17,966 | $6,833 | $11,133 | $51,700 | $11,231 | $40,469 |
| Adjusted EBITDA (3) | $33,479 | $19,788 | $13,691 | $101,144 | $58,135 | $43,009 |
| Net income margin | 7.4% | 3.9% | 3.5% | 7.0% | 2.0% | 5.0% |
| Adjusted EBITDA margin (3) | 13.7% | 11.3% | 2.5% | 13.7% | 10.5% | 3.2% |

(1) To achieve an optimal comparison of fiscal weeks in the CAVA Same Restaurant Sales calculation in fiscal 2024, giving consideration to holiday periods, each week of fiscal 2023 was shifted by one week. As a result of this shift, approximately $2.3 million of revenue is not included in CAVA Same Restaurant Sales Growth for the forty weeks ended October 6, 2024. Had this shift not been made, CAVA Same Restaurant Sales Growth would have been 11.6% in the forty weeks ended October 6, 2024 and immaterially impacted in the twelve weeks ended October 6, 2024.

(2) Presented on a trailing thirteen period basis. For purposes of calculating CAVA AUV for the reporting period ended October 6, 2024, the applicable measurement period is the trailing thirteen periods ended October 6, 2024, excluding the 53rd week of fiscal 2023. For the reporting period ended October 1, 2023, the applicable measurement period is the trailing thirteen periods ended October 1, 2023.

(3) See “Non-GAAP Financial Measures” below for a discussion of Adjusted EBITDA and Adjusted EBITDA Margin, and a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP measure to Adjusted EBITDA. Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of revenue.

### CAVA Restaurants and Net New CAVA Restaurant Openings

The following table details CAVA restaurant unit data:

| CAVA Restaurants | Twelve Weeks Ended October 6, 2024 | October 1, 2023 | Forty Weeks Ended October 6, 2024 | October 1, 2023 |
| --- | ---: | ---: | ---: | ---: |
| Beginning of period | 341 | 279 | 309 | 237 |
| New CAVA restaurant openings(1) | 11 | 11 | 44 | 54 |
| Permanent closure | — | — | (1) | (1) |
| End of period | 352 | 290 | 352 | 290 |

(1) New CAVA restaurant openings during the twelve and forty weeks ended October 1, 2023 includes converted Zoes Kitchen locations.

**Results of Operation**s

Our results of operations, on a consolidated basis and by segment, for the twelve and forty weeks ended October 6, 2024 and October 1, 2023 are set forth below. We present our segment results before our consolidated results as we believe that our CAVA segment is more useful and meaningful in assessing the performance of our business, which is mainly driven by our CAVA segment. As of March 2, 2023, we no longer operate any Zoes Kitchen locations, and on October 20, 2023, our conversion strategy was completed with the last conversion restaurant opening. As a result, we have limited our discussion of the Zoes Kitchen segment. In addition, because our consolidated results of operations include the results of our Zoes Kitchen segment, we believe that our consolidated results of operations are less indicative of our performance as compared to our CAVA segment.

### Comparison of the twelve weeks ended October 6, 2024 and October 1, 2023

### CAVA Segment Results

The following table summarizes the results of the CAVA segment:

*(in thousands)*

|  | Twelve Weeks Ended October 6, 2024 $% of Revenue |  | October 1, 2023 $% of Revenue |  | Change $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | $241,499 | 100.0% | $173,759 | 100.0% | $67,740 | 39.0% |
| Restaurant operating expenses (excluding depreciation and amortization) |  |  |  |  |  |  |
| Food, beverage, and packaging | 72,230 | 29.9 | 51,085 | 29.4 | 21,145 | 41.4 |
| Labor | 61,233 | 25.4 | 43,913 | 25.3 | 17,320 | 39.4 |
| Occupancy | 16,412 | 6.8 | 13,782 | 7.9 | 2,630 | 19.1 |
| Other operating expenses | 29,805 | 12.3 | 21,399 | 12.3 | 8,406 | 39.3 |
| Total restaurant operating expenses | 179,680 | 74.4 | 130,179 | 74.9 | 49,501 | 38.0 |
| Restaurant-level profit | $61,819 | 25.6% | $43,580 | 25.1% | $18,239 | 41.9% |

#### CAVA Revenue:

The increase in CAVA Revenue was primarily due to a $38.3 million increase from the 73 Net New CAVA Restaurant Openings during or subsequent to the twelve weeks ended October 1, 2023. In addition, the increase in CAVA Revenue was driven by CAVA Same Restaurant Sales Growth of 18.1%, which consisted of a 12.9% increase from guest traffic and a 5.2% increase from menu price and product mix.

#### CAVA food, beverage, and packaging:

The increase in CAVA food, beverage, and packaging was primarily due to an $11.9 million increase from the 73 Net New CAVA Restaurant Openings during or subsequent to the twelve weeks ended October 1, 2023. The remainder of the increase was primarily due to CAVA Same Restaurant Sales Growth of 18.1%.

As a percentage of CAVA Revenue, CAVA food, beverage, and packaging increased primarily due to input costs associated with the June 3rd launch of grilled steak.

#### CAVA labor:

The increase in CAVA labor was primarily due to the 73 Net New CAVA Restaurant Openings during or subsequent to the twelve weeks ended October 1, 2023. The remainder of the increase was primarily due to the impact of higher average hourly wages of 8%.

As a percentage of CAVA Revenue, CAVA labor increased due to the aforementioned incremental wage investments, which includes the impact of Assembly Bill 1228 in California (which we did not offset with an increase to menu price), partially offset by the impact of higher sales.

#### CAVA occupancy:

The increase in CAVA occupancy was primarily due to the 73 Net New CAVA Restaurant Openings during or subsequent to the twelve weeks ended October 1, 2023.

As a percentage of CAVA Revenue, CAVA occupancy decreased primarily due to operating leverage associated with higher sales.

#### CAVA other operating expenses:

The increase in CAVA other operating expenses was primarily due to the 73 Net New CAVA Restaurant Openings during or subsequent to the twelve weeks ended October 1, 2023, CAVA Same Restaurant Sales Growth of 18.1%, and increased investments in the integrity of our physical spaces to support our increased restaurant volumes.

As a percentage of CAVA Revenue, CAVA other operating expenses were flat primarily due to operating leverage associated with higher sales offset by the aforementioned investments in the integrity of our physical spaces in support of our increased restaurant volumes.

### Other Results

The following table summarizes remaining activity related to our CPG operations:

*(in thousands)*

|  | Twelve Weeks Ended October 6, 2024 $% of Revenue |  | October 1, 2023 $% of Revenue |  | Change $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | $2,318 | 100.0% | $1,794 | 100.0% | $524 | 29.2% |
| Food, beverage, and packaging | 1,310 | 56.5 | 733 | 40.9 | 577 | 78.7 |
| Other operating expenses | 180 | 7.8 | 154 | 8.6 | 26 | 16.9 |

The increases noted above were primarily a result of increased sales of dips, spreads, and dressings.

### Consolidated Results

The following table summarizes our consolidated results of operations:

*(in thousands)*

|  | Twelve Weeks Ended October 6, 2024 $% of Revenue |  | October 1, 2023 $% of Revenue |  | Change $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | $243,817 | 100.0% | $175,553 | 100.0% | $68,264 | 38.9% |
| Operating expenses: |  |  |  |  |  |  |
| Restaurant operating expenses (excluding depreciation and amortization) |  |  |  |  |  |  |
| Food, beverage, and packaging | 73,540 | 30.2 | 51,818 | 29.5 | 21,722 | 41.9 |
| Labor | 61,233 | 25.1 | 43,913 | 25.0 | 17,320 | 39.4 |
| Occupancy | 16,412 | 6.7 | 13,782 | 7.9 | 2,630 | 19.1 |
| Other operating expenses | 29,985 | 12.3 | 21,553 | 12.3 | 8,432 | 39.1 |
| Total restaurant operating expenses | 181,170 | 74.3 | 131,066 | 74.7 | 50,104 | 38.2 |
| General and administrative expenses | 29,830 | 12.2 | 24,472 | 13.9 | 5,358 | 21.9 |
| Depreciation and amortization | 14,325 | 5.9 | 11,528 | 6.6 | 2,797 | 24.3 |
| Restructuring and other costs | 230 | 0.1 | 1,092 | 0.6 | (862) | (78.9) |
| Pre-opening costs | 2,819 | 1.2 | 3,410 | 1.9 | (591) | (17.3) |
| Impairment and asset disposal costs | 1,675 | 0.7 | 1,190 | 0.7 | 485 | 40.8 |
| Total operating expenses | 230,049 | 94.4 | 172,758 | 98.4 | 57,291 | 33.2 |
| Income from operations | 13,768 | 5.6 | 2,795 | 1.6 | 10,973 | N/M |
| Interest income, net | (4,091) | (1.7) | (3,956) | (2.3) | (135) | 3.4 |
| Other income, net | (50) | — | (120) | (0.1) | 70 | (58.3) |
| Income before taxes | 17,909 | 7.3 | 6,871 | 3.9 | 11,038 | 160.6 |
| (Benefit from) provision for income taxes | (57) | — | 38 | — | (95) | N/M |
| Net income | $17,966 | 7.4% | $6,833 | 3.9% | $11,133 | 162.9% |

N/M data not meaningful

#### Revenue:

The increase in consolidated revenue was primarily driven by a $67.7 million increase in our CAVA segment. Refer to CAVA Segment Results above for more information.

#### Food, beverage, and packaging:

The increase in consolidated food, beverage, and packaging was primarily driven by a $21.1 million increase in our CAVA segment. Refer to CAVA Segment Results above for more information.

#### Labor:

The increase in consolidated labor was driven by a $17.3 million increase in our CAVA segment. Refer to CAVA Segment Results above for more information.

#### Occupancy:

The increase in consolidated occupancy was driven by a $2.6 million increase in our CAVA segment. Refer to CAVA Segment Results above for more information.

#### Other operating expenses:

The increase in consolidated other operating expenses was driven by an $8.4 million increase in our CAVA segment. Refer to CAVA Segment Results above for more information.

#### General and administrative expenses:

The increase in general and administrative expenses was primarily due to investments to support future growth and the timing of performance-based incentive compensation.

#### Depreciation and amortization:

The increase in depreciation and amortization was primarily driven by the addition of assets from the 73 Net New CAVA Restaurant Openings during or subsequent to the twelve weeks ended October 1, 2023 and the commencement of operations at our new manufacturing facility in Verona, Virginia in the first quarter of fiscal 2024.

#### Restructuring and other costs:

The decrease in restructuring and other costs was due in part to costs incurred in the prior year quarter in connection with our Zoes Kitchen conversion strategy.

#### Pre-opening costs:

The decrease in pre-opening costs was due to the volume and timing of new CAVA restaurant openings.

#### Impairment and asset disposal costs:

The increase in impairment and asset disposal costs was primarily due to the impact of Hurricane Helene on one of our restaurants in North Carolina and investments in the integrity of our physical spaces in support of our increased restaurant volumes, partially offset by a $0.6 million impairment charge recorded in the prior year quarter.

#### Interest income, net:

The increase in interest income, net, was due to interest income associated with higher short term investments as a result of proceeds from the IPO.

#### Income taxes:

The Company’s effective tax rates for the twelve and forty weeks ended October 6, 2024 and October 1, 2023 were not meaningful due to the valuation allowance recorded against deferred tax assets (“DTAs”). Management has evaluated our recent profitability trends and believes that, if current trends persist, it is reasonably possible that in the fourth quarter of fiscal 2024, sufficient positive evidence will become available to allow us to reach the conclusion that a significant portion of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain DTAs and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance to be released are subject to change based on the positive evidence, including, but not limited to, the level of expected profitability, that we are able to actually achieve in future periods.

### Comparison of the forty weeks ended October 6, 2024 and October 1, 2023

### CAVA Segment Results

The following table summarizes the results of the CAVA segment:

*(in thousands)*

|  | Forty Weeks Ended October 6, 2024 $% of Revenue |  | October 1, 2023 $% of Revenue |  | Change $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | $729,173 | 100.0% | $541,609 | 100.0% | $187,564 | 34.6% |
| Restaurant operating expenses (excluding depreciation and amortization) |  |  |  |  |  |  |
| Food, beverage, and packaging | 212,414 | 29.1 | 157,720 | 29.1 | 54,694 | 34.7 |
| Labor | 186,134 | 25.5 | 136,978 | 25.3 | 49,156 | 35.9 |
| Occupancy | 52,751 | 7.2 | 43,273 | 8.0 | 9,478 | 21.9 |
| Other operating expenses | 90,174 | 12.4 | 65,459 | 12.1 | 24,715 | 37.8 |
| Total restaurant operating expenses | 541,473 | 74.3 | 403,430 | 74.5 | 138,043 | 34.2 |
| Restaurant-level profit | $187,700 | 25.7% | $138,179 | 25.5% | $49,521 | 35.8% |

18

#### CAVA Revenue:

The increase in CAVA Revenue was primarily due to a $125.0 million increase from the 115 Net New CAVA Restaurant Openings during or subsequent to the forty weeks ended October 1, 2023, of which a portion was attributable to the 28 CAVA restaurants that were converted from Zoes Kitchen locations. In addition, the increase in CAVA Revenue was driven by CAVA Same Restaurant Sales Growth of 11.1%, which consisted of a 6.6% increase from guest traffic and a 4.5% increase from menu price and product mix. To achieve an optimal comparison of fiscal weeks in the CAVA Same Restaurant Sales calculation giving consideration to holiday periods, each week of fiscal 2023 was shifted by one week. As a result of this shift, approximately $2.3 million of revenue is not included in CAVA Same Restaurant Sales Growth.

#### CAVA food, beverage, and packaging:

The increase in CAVA food, beverage, and packaging was primarily due to a $37.5 million increase from the 115 Net New CAVA Restaurant Openings during or subsequent to the forty weeks ended October 1, 2023, of which a portion was attributable to the 28 CAVA restaurants that were converted from Zoes Kitchen locations. The remainder of the increase was primarily due to CAVA Same Restaurant Sales Growth of 11.1%. As a percentage of CAVA Revenue, CAVA food, beverage, and packaging was flat primarily due to input costs associated with the June 3rd launch of grilled steak offset by lower other input costs.

#### CAVA labor:

The increase in CAVA labor was primarily due to the 115 Net New CAVA Restaurant Openings during or subsequent to the forty weeks ended October 1, 2023, of which a portion was attributable to the 28 CAVA restaurants that were converted from Zoes Kitchen locations. The remainder of the increase was primarily due to the impact of higher average hourly wages of 8%.

As a percentage of CAVA Revenue, CAVA labor increased due to the aforementioned incremental wage investments, which include the impact of Assembly Bill 1228 in California (which we did not offset with an increase to menu price), partially offset by the impact of higher sales.

#### CAVA occupancy:

The increase in CAVA occupancy was primarily due to the 115 Net New CAVA Restaurant Openings during or subsequent to the forty weeks ended October 1, 2023, of which a portion was attributable to the 28 CAVA restaurants that were converted from Zoes Kitchen locations.

As a percentage of CAVA Revenue, CAVA occupancy decreased primarily due to operating leverage associated with higher sales.

#### CAVA other operating expenses:

The increase in CAVA other operating expenses was primarily due to the 115 Net New CAVA Restaurant Openings during or subsequent to the forty weeks ended October 1, 2023, of which a portion was attributable to the 28 CAVA restaurants that were converted from Zoes Kitchen locations, investments in the integrity of our physical spaces in support of our increased restaurant volumes, and CAVA Same Restaurant Sales Growth of 11.1%.

As a percentage of CAVA Revenue, CAVA other operating expenses increased due in part to the aforementioned investments in the integrity of our physical spaces in support of our increased restaurant volumes, partially offset by operating leverage associated with higher sales.

### Zoes Kitchen Segment Results

The following table summarizes the results of the Zoes Kitchen segment:

*(in thousands)*

|  | Forty Weeks Ended October 6, 2024 $% of Revenue |  | October 1, 2023 $% of Revenue |  | Change $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | --- |
| Revenue | $— | —% | $3,867 | 100.0% | $(3,867) | N/M |
| Restaurant operating expenses, excluding depreciation and amortization: |  |  |  |  |  |  |
| Food, beverage, and packaging | — | — | 1,141 | 29.5 | (1,141) | N/M |
| Labor | — | — | 1,506 | 38.9 | (1,506) | N/M |
| Occupancy | — | — | 508 | 13.1 | (508) | N/M |
| Other operating expenses | — | — | 889 | 23.0 | (889) | N/M |
| Total restaurant operating expenses | — | — | 4,044 | 104.6 | (4,044) | N/M |
| Restaurant-level loss | $— | —% | $(177) | (4.6)% | $177 | N/M |

N/M data not meaningful

As of March 2, 2023, the Company no longer operates any Zoes Kitchen locations, which resulted in the decreases above.

### Other Results

The following table summarizes remaining activity related to our CPG operations:

*(in thousands)*

|  | Forty Weeks Ended October 6, 2024 $% of Revenue |  | October 1, 2023 $% of Revenue |  | Change $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | $7,145 | 100.0% | $6,054 | 100.0% | $1,091 | 18.0% |
| Food, beverage, and packaging | 3,912 | 54.8 | 3,075 | 50.8 | 837 | 27.2 |
| Other operating expenses | 560 | 7.8 | 499 | 8.2 | 61 | 12.2 |

The increases noted above were primarily a result of increased sales of dips, spreads, and dressings.

### Consolidated Results

The following table summarizes our consolidated results of operations:

*(in thousands)*

|  | Forty Weeks Ended October 6, 2024 $% of Revenue |  | October 1, 2023 $% of Revenue |  | Change $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | $736,318 | 100.0% | $551,530 | 100.0% | $184,788 | 33.5% |
| Operating expenses: |  |  |  |  |  |  |
| Restaurant operating expenses (excluding depreciation and amortization) |  |  |  |  |  |  |
| Food, beverage, and packaging | 216,326 | 29.4 | 161,936 | 29.4 | 54,390 | 33.6 |
| Labor | 186,134 | 25.3 | 138,484 | 25.1 | 47,650 | 34.4 |
| Occupancy | 52,751 | 7.2 | 43,781 | 7.9 | 8,970 | 20.5 |
| Other operating expenses | 90,734 | 12.3 | 66,847 | 12.1 | 23,887 | 35.7 |
| Total restaurant operating expenses | 545,945 | 74.1 | 411,048 | 74.5 | 134,897 | 32.8 |
| General and administrative expenses | 91,951 | 12.5 | 76,817 | 13.9 | 15,134 | 19.7 |
| Depreciation and amortization | 45,380 | 6.2 | 35,096 | 6.4 | 10,284 | 29.3 |
| Restructuring and other costs | 582 | 0.1 | 5,160 | 0.9 | (4,578) | (88.7) |
| Pre-opening costs | 9,500 | 1.3 | 12,809 | 2.3 | (3,309) | (25.8) |
| Impairment and asset disposal costs | 3,795 | 0.5 | 4,295 | 0.8 | (500) | (11.6) |
| Total operating expenses | 697,153 | 94.7 | 545,225 | 98.9 | 151,928 | 27.9 |
| Income from operations | 39,165 | 5.3 | 6,305 | 1.1 | 32,860 | N/M |
| Interest income, net | (12,829) | (1.7) | (4,630) | (0.8) | (8,199) | 177.1 |
| Other income, net | (188) | — | (412) | (0.1) | 224 | (54.4) |
| Income before taxes | 52,182 | 7.1 | 11,347 | 2.1 | 40,835 | N/M |
| Provision for income taxes | 482 | 0.1 | 116 | — | 366 | N/M |
| Net income | $51,700 | 7.0% | $11,231 | 2.0% | $40,469 | N/M |

N/M data not meaningful

#### Revenue:

The increase in consolidated revenue was primarily driven by a $187.6 million increase in our CAVA segment, partially offset by a $3.9 million decrease in our Zoes Kitchen segment, which was no longer operating as of March 2, 2023. Refer to CAVA Segment Results above for more information.

#### Food, beverage, and packaging:

The increase in consolidated food, beverage, and packaging was primarily driven by a $54.7 million increase in our CAVA segment, partially offset by a $1.1 million decrease in our Zoes Kitchen segment. Refer to CAVA Segment Results above for more information.

#### Labor:

The increase in consolidated labor was primarily driven by a $49.2 million increase in our CAVA segment, partially offset by a $1.5 million decrease in our Zoes Kitchen segment. Refer to CAVA Segment Results above for more information.

#### Occupancy:

The increase in consolidated occupancy was primarily driven by a $9.5 million increase in our CAVA segment, partially offset by a $0.5 million decrease in our Zoes Kitchen segment. Refer to CAVA Segment Results above for more information.

#### Other operating expenses:

The increase in consolidated other operating expenses was primarily driven by a $24.7 million increase in our CAVA segment, partially offset by a $0.9 million decrease in our Zoes Kitchen segment. Refer to CAVA Segment Results above for more information.

#### General and administrative expenses:

The increase in general and administrative expenses was primarily due to investments to support future growth, higher equity-based compensation associated with awards made in connection with the IPO, and recurring public company costs, partially offset by $1.1 million in certain non-recurring public company costs in the prior year period.

#### Depreciation and amortization:

The increase in depreciation and amortization was primarily driven by the addition of assets from the 115 Net New CAVA Restaurant Openings during or subsequent to the forty weeks ended October 1, 2023, the commencement of operations at our new manufacturing facility in Verona, Virginia in the first quarter of fiscal 2024, and technology improvements.

#### Restructuring and other costs:

The decrease in restructuring and other costs was primarily due to costs incurred in the prior year period in connection with our Zoes Kitchen conversion strategy, public company readiness, and the relocation of our collaboration center.

#### Pre-opening costs:

The decrease in pre-opening costs was due to the volume and timing of new CAVA restaurant openings.

#### Impairment and asset disposal costs:

The decrease in impairment and asset disposal costs was primarily due to $1.3 million of impairment charges and higher costs in connection with Zoes Kitchen actual and anticipated closures in the prior year period, partially offset by investments in the integrity of our physical spaces in support of our increased restaurant volumes and the impact of Hurricane Helene on one of our restaurants in North Carolina.

#### Interest income, net:

The increase in interest income, net, was due to interest income associated with higher short term investments as a result of proceeds from the IPO.

### Non-GAAP Financial Measures

In addition to our consolidated financial statements, which are prepared in accordance with GAAP, we present Adjusted EBITDA and Adjusted EBITDA Margin as supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. We believe these non-GAAP financial measures assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our operating performance. Management believes Adjusted EBITDA and Adjusted EBITDA Margin are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate, and capital investments. Management uses Adjusted EBITDA and Adjusted EBITDA Margin to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone provide.

Adjusted EBITDA and Adjusted EBITDA Margin are not recognized terms under GAAP and should not be considered as alternatives to net income or net income margin as measures of financial performance, or cash provided by operating activities as measures of liquidity, or any other performance measure derived in accordance with GAAP. Additionally, these measures are not intended to be measures of free cash flow available for management’s discretionary use, as they do not consider certain cash requirements such as tax payments and financing cash flows. Because not all companies use identical calculations, the presentation of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company.

Our Adjusted EBITDA and Adjusted EBITDA Margin measures have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under GAAP. Some of these limitations are:

- Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
- Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
- Adjusted EBITDA does not reflect financing activities of our business;
- Adjusted EBITDA does not reflect period to period changes in taxes, income tax expense or the cash necessary to pay income taxes;
- Adjusted EBITDA does not reflect the impact of earnings or cash charges resulting from matters we consider not to be indicative of our ongoing operations;
- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and
- other companies in our industry may calculate Adjusted EBITDA and Adjusted EBITDA Margin differently than we do, limiting their usefulness as comparative measures.

The following tables provides a reconciliation of net income to Adjusted EBITDA and net income margin to Adjusted EBITDA Margin:

*(in thousands)*

|  | Twelve Weeks Ended October 6, 2024 | October 1, 2023 | Forty Weeks Ended October 6, 2024 | October 1, 2023 |
| --- | ---: | ---: | ---: | ---: |
| Net income | $17,966 | $6,833 | $51,700 | $11,231 |
| Non-GAAP Adjustments |  |  |  |  |
| Interest income, net | (4,091) | (3,956) | (12,829) | (4,630) |
| (Benefit from) provision for income taxes | (57) | 38 | 482 | 116 |
| Depreciation and amortization | 14,325 | 11,528 | 45,380 | 35,096 |
| Equity-based compensation | 3,481 | 3,183 | 12,222 | 6,166 |
| Other income, net | (50) | (120) | (188) | (412) |
| Impairment and asset disposal costs | 1,675 | 1,190 | 3,795 | 4,295 |
| Restructuring and other costs | 230 | 1,092 | 582 | 5,160 |
| Certain non-recurring public company costs | — | — | — | 1,113 |
| Adjusted EBITDA | $33,479 | $19,788 | $101,144 | $58,135 |
| Revenue | $243,817 | $175,553 | $736,318 | $551,530 |
| Net income margin | 7.4% | 3.9% | 7.0% | 2.0% |
| Adjusted EBITDA Margin | 13.7% | 11.3% | 13.7% | 10.5% |

### Liquidity and Capital Resources

We assess our liquidity in terms of our ability to generate adequate amounts of cash to meet our current and expected future operating needs. Our expected primary uses of cash on a short- and long-term basis are for the expansion of our restaurant base, working capital, and other capital expenditures.

We believe that cash provided by operating activities and existing cash on hand, together with amounts available under our 2022 Credit Facility, will be sufficient to satisfy our anticipated cash requirements for the next twelve months and foreseeable future, including our expected capital expenditures for expansion of our CAVA restaurant base, operating lease obligations, and working capital obligations. Our sources of liquidity could be affected by factors described under the section entitled “Risk Factors” in our 2023 Annual Report. Depending on the severity and direct impact of these factors on us, we may not be able to secure additional financing on acceptable terms, or at all.

### Cash Overview

We had cash and cash equivalents of $367.2 million and $332.4 million as of October 6, 2024 and December 31, 2023, respectively. For the forty weeks ended October 6, 2024, our operations were funded from cash flows from operations.

Our principal uses of liquidity for the forty weeks ended October 6, 2024 were to fund new restaurant openings, working capital needs and the finalization of construction of our new production facility in Verona, Virginia.

### Cash Flows

The following table summarizes our cash flows:

*(in thousands)*

|  | Forty Weeks Ended October 6, 2024 | October 1, 2023 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Net cash provided by operating activities | $131,174 | $73,088 | $58,086 | 79.5% |
| Net cash used in investing activities | (80,389) | (107,564) | 27,175 | (25.3) |
| Net cash (used in) provided by financing activities | (16,053) | 335,750 | (351,803) | (104.8) |
| Net change in cash and cash equivalents | $34,732 | $301,274 | $(266,542) | (88.5)% |

#### Operating Activities:

The increase in net cash provided by operating activities was primarily due to improved operating performance and interest income associated with an increase in short-term investments as a result of proceeds from the IPO.

#### Investing Activities:

The decrease in net cash used in investing activities was primarily due to higher capital expenditures in the prior year period related to the construction of our new manufacturing facility and the volume and timing of new CAVA restaurant openings.

#### Financing Activities:

The change in net cash (used in) provided by financing activities was primarily due to proceeds from the IPO in the prior year period and higher tax withholding obligations arising from the vesting of restricted stock units in the forty weeks ended October 6, 2024 compared with the prior year period.

### Material Cash Commitments

There has been no significant changes to the material cash commitments as disclosed in our 2023 Annual Report, other than those payments made in the ordinary course of business.

### Credit Facility

Refer to Item 1, Financial Statements, Note 6 (Debt), for a description of our 2022 Credit Facility.

### Critical Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from those estimates. We had no significant changes to our critical accounting estimates as described in our 2023 Annual Report.

### Recent Accounting Pronouncements

Refer to Item 1, Financial Statements, Note 1 (Nature of Operations and Basis of Presentation).

### JOBS Act Election

We are currently an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. As of July 14, 2024, the market value of our common stock held by non-affiliates exceeded $700.0 million. As a result, the Company will become a large accelerated filer beginning December 30, 2024, the first day of our next fiscal year, and will no longer be an emerging growth company for future filings. Therefore, as of that date, we will be required to comply with new or revised accounting standards as of the effective dates applicable to public companies that are not emerging growth companies.

## Market risk

As filed, 286 characters.

We are exposed to market risks in the ordinary course of business. The primary risks we face are commodity and food price risks, interest rate risk, and the effects of inflation. There have been no material changes to our exposure to market risks as described in our 2023 Annual Report.

## Controls and procedures

As filed, 1,462 characters.

### Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

### Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended October 6, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 2,572 characters.

There have been no material changes to the risk factors disclosed in our 2023 Annual Report, except as follows:

***We will no longer qualify as an “emerging growth company” after December 29, 2024, and, as a result, we will have to comply with increased disclosure and compliance requirements.***

We are currently an “emerging growth company” as defined in the JOBS Act. However, because the market value of our common stock held by non-affiliates exceeded $700.0 million as of July 14, 2024, we will no longer qualify as an emerging growth company as of December 29, 2024, the last day of our current fiscal year, and will be a large accelerated filer beginning December 30, 2024 for future filings.

As a large accelerated filer, we will be subject to certain disclosure and compliance requirements that apply to other public companies that did not previously apply to us due to our status as an emerging growth company. These requirements include, but are not limited to:

- the requirement that our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002;
- compliance with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements;
- the requirement that we provide more detailed disclosures regarding executive compensation; and
- the requirement that we hold a non-binding advisory vote on executive compensation and obtain stockholder approval of any golden parachute payments not previously approved.

The loss of emerging growth company status and compliance with the additional requirements of being a large accelerated filer together with being a public company has resulted and will continue to result in increased legal, accounting and financial compliance costs, and costs associated with investor relations activities, and cause management and other personnel to divert attention from operational and other business matters to devote substantial time to public company reporting requirements. In addition, if we are not able to comply with changing requirements in a timely manner, the market price of our stock could decline and we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the SEC or other regulatory authorities, which would require additional financial and management resources.

Filed Nov 13, 2024.
Source: SEC EDGAR, the filing index for accession 0001628280-24-047336. Last ingested by Listed: Oct 24, 2026, 15:14 ET. No prices; not investment advice.