[Management View]
CAVA Group, Inc. reported a robust Q1 2025 performance with revenue of $328.5 million, up 28.2% YoY, and net income of $25.7 million, an 83.7% increase. Same restaurant sales grew 10.8%, driven by a 7.5% increase in traffic. Management emphasized strategic investments in labor, loyalty programs, and menu innovation, including a new protein rollout later this year. The company also highlighted its Mediterranean cuisine leadership and long-term growth strategy, targeting 1,000 restaurants by 2032.

[Outlook]
For FY2025, CAVA projects 64-68 net new restaurant openings, same restaurant sales growth of 6%-8%, and adjusted EBITDA of $152-$159 million. Restaurant-level profit margins are expected to remain between 24.8%-25.2%. Management plans to continue expanding geographically, enhancing loyalty programs, and rolling out operational technologies like kitchen display systems.

[Financial Performance]
- Revenue: $328.5 million (+28.2% YoY)
- Net Income: $25.7 million (+83.7% YoY)
- Adjusted EBITDA: $44.9 million (+34.6% YoY)
- Restaurant-level profit margin: 25.1% (down 10 bps YoY due to steak-related food cost increases)
- Free Cash Flow: $2.7 million
- Cash Position: $369.4 million with no debt

[Q&A Highlights]

**Question 1:** Could you expand on the loyalty program's tiered structure and its impact on engagement?
**Answer:** The loyalty program's relaunch last fall transitioned to an earn-and-bank points model, driving a 340 bps increase in revenue contribution. The upcoming tiered structure will further recognize frequent customers with tailored benefits. Membership has grown to 8 million, with weekly additions of over 50,000 members.

**Question 2:** What is the impact of the KDS rollout on throughput and operational differences among stores?
**Answer:** The KDS system enhances order management and accuracy, allowing restaurants to manage order throttling and improve guest satisfaction. Currently deployed in 42 stores, it will expand to 250 by year-end. Differences in store performance are attributed to maturity cycles, with top-performing stores achieving AUVs above $4 million and margins over 30%.

**Question 3:** How is CAVA performing in existing markets amid increased competition?
**Answer:** CAVA has seen consistent performance across all regions, with no market-specific weaknesses. Average unit volumes exceed $2.6 million in all regions, reflecting strong consumer preference despite competitive pressures.

**Question 4:** Is Spice World the main marketing initiative for 2025, or are there additional plans?
**Answer:** Spice World is a key campaign, but another tentpole moment, likely involving a new protein, is planned for later this year.

**Question 5:** What is the inflation impact on steak and the broader food basket?
**Answer:** Steak-related costs contributed to a 100 bps increase in food costs, but the broader basket remains stable due to effective supply chain management and contracted rates.

**Question 6:** How is the chicken shawarma test progressing?
**Answer:** Testing in Dallas and Florida has shown positive consumer reception. The protein aligns with Mediterranean cuisine and is operationally efficient. If successful, it will roll out system-wide in coming quarters.

**Question 7:** How does CAVA prioritize restaurant margin expansion versus reinvestment?
**Answer:** Margin improvements are driven by higher AUVs, but CAVA reinvests in team wages, benefits, and guest experience. Menu price increases have been limited to maintain value for customers.

**Question 8:** Can you elaborate on the labor deployment model's success?
**Answer:** The model has improved productivity during lunch and dinner by redistributing hours and reducing operational stress. It enables managers to focus on guest interaction and team leadership, with further refinements planned.

**Question 9:** How does CAVA view demand trends and regional performance?
**Answer:** Despite macroeconomic uncertainty, CAVA has seen positive traffic across all geographies, income strata, and dayparts. The DC area and lunch daypart remain strong, with no signs of softness.

**Question 10:** How are new markets like Indiana and Miami performing?
**Answer:** New locations in Indianapolis, South Florida, and Lafayette, Louisiana, are exceeding expectations, demonstrating the brand's scalability and white space potential.

**Question 11:** What is driving mix trends in Q1?
**Answer:** Mix trends remain healthy, supported by premium attachments like steak and Pita Chips. Menu price increases of 1.7% also contributed.

[Sentiment Analysis]
Management conveyed confidence in CAVA's growth trajectory, emphasizing operational efficiency and innovation. Analysts were positive, focusing on loyalty program success, operational improvements, and market expansion.

[Quarterly Comparison]
| Metric | Q1 2025 | Q1 2024 | YoY Change |
|----------------------------|-----------------|-----------------|------------------|
| Revenue | $328.5M | $256.2M | +28.2% |
| Net Income | $25.7M | $14.0M | +83.7% |
| Adjusted EBITDA | $44.9M | $33.4M | +34.6% |
| Restaurant-Level Margin | 25.1% | 25.2% | -10 bps |

[Risks and Concerns]
1. Food cost inflation, particularly steak-related, could pressure margins.
2. Macroeconomic uncertainty may impact consumer spending.
3. Execution risks in scaling new technologies like KDS and labor models.

[Final Takeaway]
CAVA delivered a strong Q1 2025, driven by robust same restaurant sales growth, operational efficiencies, and strategic investments in loyalty and menu innovation. The company is well-positioned for sustained growth, with plans to expand its footprint and enhance customer engagement. However, food cost pressures and macroeconomic uncertainties warrant close monitoring. Investors should view CAVA as a growth-oriented brand with a clear path to scaling its Mediterranean cuisine leadership.