CAVA GROUP INC

Previous wording

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 July 14, 2024, the Company operated 341 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.

Current wording

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.

Previous wording

(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 $3.8 million of revenue is not included in CAVA Same Restaurant Sales Growth for the twenty-eight weeks ended July 14, 2024. Had this shift not been made, CAVA Same Restaurant Sales Growth would have been 9.0% in the twenty-eight weeks ended July 14, 2024 and immaterially impacted in the twelve weeks ended July 14, 2024.

Current wording

(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.

Previous wording

(1) New CAVA restaurant openings during the twelve and twenty-eight weeks ended July 9, 2023 includes converted Zoes Kitchen locations.

Current wording

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

Previous wording

Our results of operations, on a consolidated basis and by segment, for the twelve and twenty-eight weeks ended July 14, 2024 and July 9, 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.

Current wording

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.

Previous wording

The increase in CAVA Revenue was primarily due to a $36.1 million increase from the 78 Net New CAVA Restaurant Openings during or subsequent to the twelve weeks ended July 9, 2023, of which a portion was attributable to the 8 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 14.4%, which consisted of a 9.5% increase from guest traffic and a 4.9% increase from menu price and product mix.

Current wording

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.

Previous wording

The increase in CAVA food, beverage, and packaging was primarily due to an $11.4 million increase from the 78 Net New CAVA Restaurant Openings during or subsequent to the twelve weeks ended July 9, 2023, of which a portion was attributable to the 8 CAVA restaurants that were converted from Zoes Kitchen locations. The remainder of the increase was primarily due to CAVA Same Restaurant Sales Growth of 14.4%.

Current wording

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%.

Previous wording

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, partially offset by other lower input costs.

Current wording

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.

Previous wording

The increase in CAVA labor was primarily due to a $10.1 million increase from the 78 Net New CAVA Restaurant Openings during or subsequent to the twelve weeks ended July 9, 2023, of which a portion was attributable to the 8 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 9%.

Current wording

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%.

Previous wording

The increase in CAVA occupancy was primarily due to a $2.4 million increase from 78 Net New CAVA Restaurant Openings during or subsequent to the twelve weeks ended July 9, 2023, of which a portion was attributable to the 8 CAVA restaurants that were converted from Zoes Kitchen locations.

Current wording

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.

Previous wording

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

Current wording

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.

Previous wording

The increase in consolidated revenue was primarily driven by a $60.3 million increase in our CAVA segment. Refer to CAVA Segment Results above for more information.

Current wording

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.

Previous wording

The increase in consolidated food, beverage, and packaging was primarily driven by a $17.8 million increase in our CAVA segment. Refer to CAVA Segment Results above for more information.

Current wording

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.

Previous wording

The increase in consolidated labor was primarily driven by a $16.0 million increase in our CAVA segment. Refer to CAVA Segment Results above for more information.

Current wording

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.

Previous wording

The increase in consolidated occupancy was primarily driven by a $2.5 million increase in our CAVA segment. Refer to CAVA Segment Results above for more information.

Current wording

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.

Previous wording

The increase in consolidated other operating expenses was primarily driven by a $7.4 million increase in our CAVA segment. Refer to CAVA Segment Results above for more information.

Current wording

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.

Previous wording

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

Current wording

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

Previous wording

The increase in depreciation and amortization was primarily driven by the addition of assets from the 104 Net New CAVA Restaurant Openings during or subsequent to the twenty-eight weeks ended July 14, 2024, technology improvements, and the commencement of operations at our new manufacturing facility in Verona, Virginia in the first quarter of fiscal 2024.

Current wording

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.

Previous wording

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

Current wording

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.

Previous wording

The increase in impairment and asset disposal costs was primarily due to investments in the integrity of our physical spaces in support of our increased restaurant volumes.

Current wording

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.

Previous wording

The Company’s effective tax rates for the twelve and twenty-eight weeks ended July 14, 2024 and July 9, 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, there is a reasonable possibility that within the current fiscal year, sufficient positive evidence may 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.

Current wording

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.

Previous wording

The increase in CAVA Revenue was primarily due to an $86.8 million increase from the 104 Net New CAVA Restaurant Openings during or subsequent to the twenty-eight weeks ended July 9, 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 7.8%, which consisted of a 4.1% increase from menu price and product mix and a 3.7% increase from guest traffic. 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 $3.8 million of revenue is not included in CAVA Same Restaurant Sales Growth.

Current wording

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.

Previous wording

The increase in CAVA food, beverage, and packaging was primarily due to a $26.5 million increase from the 104 Net New CAVA Restaurant Openings during or subsequent to the twenty-eight weeks ended July 9, 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 7.8%.

Current wording

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.

Previous wording

The increase in CAVA labor was primarily due to a $24.3 million increase from the 104 Net New CAVA Restaurant Openings during or subsequent to the twenty-eight weeks ended July 9, 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%.

Current wording

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%.

Previous wording

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.

Current wording

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.

Previous wording

The increase in CAVA occupancy was primarily due to a $6.2 million increase from 104 Net New CAVA Restaurant Openings during or subsequent to the twenty-eight weeks ended July 9, 2023, of which a portion was attributable to the 28 CAVA restaurants that were converted from Zoes Kitchen locations.

Current wording

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.

Previous wording

As a percentage of CAVA Revenue, CAVA other operating expenses increased due in part to investments in the integrity of our physical spaces in support of our increased restaurant volumes.

Current wording

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.

Previous wording

The increases in revenue and food, beverage, and packaging noted above were primarily a result of increased sales of dips, spreads, and dressings.

Current wording

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

Previous wording

The increase in consolidated revenue was primarily driven by a $119.8 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.

Current wording

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.

Previous wording

The increase in consolidated food, beverage, and packaging was primarily driven by a $33.5 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.

Current wording

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.

Previous wording

The increase in consolidated labor was primarily driven by a $31.8 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.

Current wording

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.

Previous wording

The increase in consolidated occupancy was primarily driven by a $6.8 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.

Current wording

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.

Previous wording

The increase in consolidated other operating expenses was primarily driven by a $16.3 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.

Current wording

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.

Previous wording

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 increased recurring public company costs, partially offset by $1.1 million in certain non-recurring public company costs in the prior year quarter.

Current wording

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.

Previous wording

The increase in depreciation and amortization was primarily driven by the addition of assets from the 78 Net New CAVA Restaurant Openings during or subsequent to the twelve weeks ended July 9, 2023, the commencement of operations at our new manufacturing facility in Verona, Virginia in the first quarter of fiscal 2024, and technology improvements.

Current wording

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.

Previous wording

The decrease in impairment and asset disposal costs was primarily due to higher costs in the prior year period in connection with Zoes Kitchen actual and anticipated closures partially offset by investments in the integrity of our physical spaces in support of our increased restaurant volumes.

Current wording

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.

Previous wording

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. See Item 1, Financial Statements, Note 8 (Leases) to our consolidated financial statements for more information. 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.

Current wording

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.

Previous wording

We had cash and cash equivalents of $343.7 million and $332.4 million as of July 14, 2024 and December 31, 2023, respectively. For the twenty-eight weeks ended July 14, 2024, our operations were funded from cash flows from operations. Our principal uses of liquidity for the twenty-eight weeks ended July 14, 2024 were to fund new restaurant openings, the finalization of construction of our new production facility in Verona, Virginia, and working capital needs.

Current wording

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.

Previous wording

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 twenty-eight weeks ended July 14, 2024 compared with the prior year period.

Current wording

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.

Previous wording

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.

Current wording

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.