CAVA GROUP, INC.

CAVA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

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 12, 2026, the Company operated 476 fast-casual CAVA Restaurants in 29 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 centrally produces dips, spreads, and certain dressing bases for use in its restaurants while also selling its dips, spreads, and prepared dressings in grocery stores.

Interim Financial Statements—The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles and practices of the United States of America (“GAAP”) for interim financial information. Certain information and footnote disclosures normally included in annual financial statements presented in accordance with GAAP have been omitted pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included.

The unaudited interim financial information should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2025. Interim results of operations are not necessarily indicative of the results that may be achieved for the full year.

Reclassification—Certain prior year amounts have been reclassified to conform to current year presentation.

Recently Issued Accounting Standards—In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40), which requires disaggregation, in tabular presentation, of certain income statement expenses into different categories, such as purchases of inventory, employee compensation, and depreciation. The FASB issued an update in January 2025, ASU 2025-01, which clarifies the effective date of ASU 2024-03. The amendment is effective for fiscal years beginning after December 15, 2026 (the Company’s fiscal 2027), with early adoption permitted, and may be applied on a retrospective basis. The Company is currently evaluating the impact of adopting this ASU on its financial statements and disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting guidance for costs incurred to develop or obtain internal-use software. The amendment aligns capitalization criteria with current development practices and eliminates separate guidance for website development costs. Under the new standard, capitalization of eligible costs begins when (i) management authorizes and commits to funding the project and (ii) it is probable that the project will be completed and the software will be used as intended. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027 (the Company’s fiscal 2028), and may be applied prospectively, on a modified basis for in-process projects, or retrospectively. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

The Company reviewed all other recently issued accounting standards and determined they were either not applicable or not expected to have a material impact on the Company’s financial position or results from operations.

2. REVENUE

The Company’s revenue was as follows:

Revenue from the redemption of the Company’s loyalty program (“CAVA Rewards”) and gift cards is included in restaurant revenue.

Changes in the CAVA Rewards and gift card liabilities, which are included in accrued expenses and other on the accompanying unaudited condensed consolidated balance sheets, were as follows:

3. INVESTMENTS

Fixed income debt securities

The Company’s investments in fixed income debt securities were as follows:

In determining credit losses on its investments in an unrealized loss position, the Company considers certain factors that may include, among others, severity of the unrealized loss, security type, industry sector, credit rating, yield to maturity, profitability, and stock performance. Based on the Company’s review of its investments in an unrealized loss position, it determined that the losses were due to non-credit factors and, therefore, it does not consider these securities to be credit impaired at July 12, 2026 or December 28, 2025. As of July 12, 2026 and December 28, 2025, the Company did not intend to sell any investments in an unrealized loss position, and it is not more likely than not that the Company will be required to sell any investments before recovery of their amortized cost basis.

Investments in fixed income debt securities by remaining contractual maturities were as follows:

Note Receivable

In the second quarter of fiscal 2025, the Company made a $5.0 million investment in a convertible promissory note of Hyphen Technologies, Inc., which develops and provides automated makelines designed to improve the speed and efficiency of food production. The Company is currently testing this technology in its digital business. During the first quarter of 2026, upon the achievement of a predefined milestone event, the Company made an additional $5.0 million investment in a convertible promissory note at terms substantially similar to the initial investment (collectively, the “Note Receivable”).

The Note Receivable is presented within other long-term assets on the accompanying unaudited condensed consolidated balance sheets. Refer to Note 4 (Fair Value) for more information. As of July 12, 2026 and December 28, 2025, the Company’s estimated fair value of the Note Receivable was $10.7 million and $5.3 million, respectively. The increase in the estimated fair value was primarily attributable to the additional investment described above, with the remaining increase recognized as a component of other income, net in the accompanying unaudited condensed consolidated statement of operations.

4. FAIR VALUE

Assets Measured at Fair Value on a Recurring Basis

Fixed income debt securities

The fair values of fixed income debt securities were based on the market values obtained from an independent asset management service. The asset management service utilizes the market approach in determining the fair values of the investments held by the Company. Typical inputs and assumptions to pricing models used to value the Company’s investments in fixed income debt securities include, but are not limited to, benchmark yields, reported trades, broker-dealer quotes, credit spreads, credit ratings, bond insurance (if applicable), benchmark securities, bids, offers, reference data, and industry and economic events. For asset backed securities, inputs and assumptions may also include the structure of issuance, characteristics of the issuer, collateral attributes, and prepayment speeds.

Note Receivable

The Company has elected to account for the Note Receivable described in Note 3 (Investments) under the fair value option. As a result, the embedded conversion feature, which would otherwise require bifurcation, is not accounted for separately. The fair value of the Note Receivable is determined under a market approach utilizing Level 3 inputs such as estimates of the equity value of the underlying business, volatility, and a probability-weighted expected time to exit.

The fair value of the Company’s assets that are measured on a recurring basis was as follows:

Assets Measured at Fair Value on a Non-recurring Basis—Assets recognized or disclosed at fair value in the accompanying unaudited condensed consolidated financial statements on a nonrecurring basis may include items such as property and equipment, net, operating lease assets, goodwill, and intangible assets. These assets are measured at fair value whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the twenty-eight weeks ended July 12, 2026 and July 13, 2025, the Company recorded asset impairments of $1.7 million and $1.1 million, respectively, related to certain of the Company’s restaurants, which utilized nonrecurring fair value measurements. The fair value of these assets was determined using an income approach (discounted cash flow method), which was measured using Level 3 inputs. Unobservable inputs include projected restaurant revenues and expenses and the discount rate.

5. SUPPLEMENTAL BALANCE SHEET INFORMATION

Property and equipment, net

The Company’s property and equipment, net, were as follows:

Construction in progress includes new restaurant openings and technology improvements.

Accrued expenses and other

The Company’s accrued expenses and other were as follows:

6. DEBT

On March 20, 2026, the Company entered into Amendment No. 3 to the Credit Agreement dated March 11, 2022 (as amended, the “Credit Facility”), with JPMorgan Chase Bank, N.A. as administrative agent. Amendment No. 3 among other things, extended the maturity date from March 11, 2027 to March 20, 2031 and increased aggregate revolving commitments from $75.0 million to $150.0 million. Interest rates on loans under the Credit Facility are based on either: (i) the base rate plus an applicable margin ranging from 0.00% to 1.25% per annum or (ii) the Term Secured Overnight Financing Rate plus an applicable margin ranging from 1.00% to 2.25% per annum, in each case based on the Company’s Total Rent Adjusted Net Leverage Ratio (as defined in the Credit Facility). The Company is also required to pay a commitment fee for unused amounts under the Credit Facility, which ranges from 0.20% to 0.30% based on the Total Rent Adjusted Net Leverage Ratio. The Credit Facility is unconditionally guaranteed by the Company’s domestic restricted subsidiaries other than certain excluded subsidiaries and is secured, subject to certain exceptions, by a first-priority security interest in substantially all of the assets of the Company and the guarantors and a first-priority pledge of the capital stock of each subsidiary guarantor. The Credit Facility includes customary affirmative and negative covenants and events of default.

As of July 12, 2026, the Company hadno borrowings under the Credit Facility and available borrowing capacity of $149.1 million, net of $0.9 million of outstanding letters of credit. As of July 12, 2026, the Company was in compliance with all financial and other covenants.

7. INCOME TAXES

Income taxes for the twelve and twenty-eight weeks ended July 12, 2026 have been included in the accompanying unaudited condensed consolidated financial statements on the basis of an estimated annual effective tax rate. In addition to the amount of tax resulting from applying the estimated annual effective tax rate to pre-tax income, the Company includes, when appropriate, certain items treated as discrete events to arrive at an estimated overall tax amount.

The Company’s effective tax rate and the impact on the provision for income taxes associated with discrete tax benefits associated with equity-based compensation were as follows:

The reductions to the provision for income taxes associated with equity-based compensation reflect excess tax benefits recognized when the tax deductions for vested or exercised awards exceed the related compensation expense recognized in accordance with GAAP.

8. LEASES

The Company leases all of its CAVA Restaurants, its Digital Kitchens, its production facility in Laurel, Maryland, its food distribution center in Edison, New Jersey, its restaurant collaboration center in Washington, D.C., and its support centers in Brooklyn, New York, Manhattan, New York, and Plano, Texas. The Company determines if a contract contains a lease at inception and determines the classification of a lease, if necessary. Typically, restaurant leases have initial terms of 10 years and include five-year renewal options.

Supplemental disclosures of cash flow information related to leases were as follows:

9. COMMITMENTS AND CONTINGENCIES

Purchase Obligations—The Company enters into various purchase obligations in the ordinary course of business, generally of a short-term nature. Those that are binding primarily relate to amounts owed for produce and other ingredients and supplies, including supplies and materials used for new restaurant openings.

Letters of Credit—As of July 12, 2026 and December 28, 2025, the Company hadsix irrevocable letters of credit in favor of various landlords in the aggregate amount of $0.9 million. The letters of credit do not require a compensating balance and automatically renew in accordance with the terms of the underlying lease agreement.

Litigation—The Company is currently involved in various claims and legal actions that arise in the ordinary course of its business, including claims resulting from employment related matters. While the ultimate outcome and the costs associated with litigation are inherently uncertain and difficult to predict, as of the date hereof, the Company does not believe that any of its pending legal proceedings, most of which are covered by insurance, will have a material effect on the Company’s business, financial condition, results of operations, or cash flows. However, a significant increase in the number of these claims or an increase in uninsured amounts owed under successful claims could materially and adversely affect the Company’s business, financial condition, results of operations, or cash flows.

On July 22, 2026, the Cleveland Bakers and Teamsters Pension Fund filed a derivative action in the Court of Chancery of the State of Delaware, purportedly on behalf of the Company, against certain of the Company's current and former officers and directors alleging breaches of fiduciary duty and unjust enrichment. The complaint seeks unspecified monetary damages, attorneys' fees and costs, and the disgorgement of alleged improperly obtained trading profits by the defendants. The action is in a preliminary stage and no discovery has taken place. The defendants deny they breached their fiduciary duties. The complaint does not seek damages from the Company.

10. EQUITY-BASED COMPENSATION

The Company recognized equity-based compensation expense (including applicable payroll taxes) of $5.7 million and $13.4 million during the twelve and twenty-eight weeks ended July 12, 2026, and $4.6 million and $11.2 million during the twelve and twenty-eight weeks ended July 13, 2025, respectively, related to its equity incentive plans and employee stock purchase plan, recorded within general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.

Stock Options

A summary of the Company’s stock option activity is as follows:

As of July 12, 2026, unrecognized compensation expense related to option awards was $6.1 million, which is expected to be recognized over a weighted-average period of 2.0 years.

Restricted Stock Units (“RSUs”)

During the first quarter of fiscal 2026, the Company granted RSUs that vest in equal annual installments over three years, subject to continued service. Historically, RSUs vested in equal annual installments over four years. The change in vesting term applies to awards granted in fiscal 2026 and does not modify the vesting terms of previously granted awards.

A summary of the Company’s RSU activity is as follows:

As of July 12, 2026, unrecognized compensation expense related to RSU awards was $28.7 million, which is expected to be recognized over a weighted-average period of 2.3 years.

Performance-Based Restricted Stock Units (“PSUs”)

During the first quarter of fiscal 2026, the Company granted PSUs that vest at the end of athree-year performance period based on the achievement of specified performance conditions and subject to continued service. The number of shares that may be earned ranges from 0% to 200% of target, depending on actual performance against the applicable metrics. Compensation cost is recognized over the requisite service period based on the grant-date fair value of the awards and the number of awards expected to vest.

A summary of the Company’s PSU activity is as follows:

1 Expected to vest represents estimated PSU payout amounts based on target performance levels during the performance period.

As of July 12, 2026, unrecognized compensation expense related to PSU awards was $6.2 million, which is expected to be recognized over a weighted-average period of 2.6 years.

11. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net income by the weighted average shares outstanding during the period. Diluted earnings per share is calculated by adjusting the weighted average shares outstanding for the dilutive effect of outstanding equity awards for the period using the treasury-stock method.

The following table sets forth the computation of earnings per common share:

The following equity awards, presented on a weighted-average outstanding basis, were excluded from the calculation of diluted earnings per share:

12. SEGMENT REPORTING

The Company’s operations are conducted astwo operating segments: CAVA and CAVA Foods. CAVA includes the operations of all company-owned CAVA restaurants. CAVA Foods includes the production of dips, spreads, and certain dressing bases used in CAVA restaurants as well as sales from the Company’s CPG business. These segments were determined on the same basis that the Company’s Chief Executive Officer (“CEO”), who is the chief operating decision maker (“CODM”), manages, evaluates, and makes key decisions regarding the business. The CODM does not manage the Company on a consolidated basis. CAVA Foods is below the quantitative thresholds for segment reporting purposes, resulting in CAVA being the Company’sone reportable segment. Other revenue and Other non-reportable segment profit include the Company’s CPG activity from CAVA Foods.

The CODM reviews segment performance and allocates resources based upon restaurant-level profit, which is defined as segment revenues less food, beverage, and packaging, labor, occupancy, and other operating expenses. Restaurant-level profit is used to measure the segment’s profitability as corporate-level expenses are excluded from such measure. The CODM uses restaurant-level profit for each segment in the annual budget to make decisions about the allocation of resources, with the monitoring of actual results to determine appropriate changes to such allocation. All segment revenue is earned in the United States, and all intersegment revenues have been eliminated. Intersegment revenues represent the sale, from CAVA Foods to CAVA, of dips, spreads, and certain dressing bases used in CAVA restaurants. Sales from external customers are derived principally from sales of food, beverage, and CPG. The Company does not rely on any major customers as sources of sales. As the CODM does not review asset information by segment, assets are reported only on a consolidated basis.

The following table presents financial information about the Company’s reportable segment and includes reconciliations of reportable segment revenue to consolidated revenue and reportable segment restaurant-level profit to income before taxes:

1 Other operating expenses includes all other restaurant-level operating expenses, such as third-party delivery service fees, credit card and bank fees, repairs and maintenance, kitchen supplies, utilities, restaurant technology costs, and marketing expenses.