CAVA Stock Crashes: What’s Behind the Bloodbath?

Another day, another market tantrum—CAVA shares just got gutted. Here’s the breakdown.

The Drop: More Than Just Bad Hummus

No sugarcoating it: CAVA’s stock got obliterated today. Was it weak earnings? A macro meltdown? Or just Wall Street realizing Mediterranean fast-casual isn’t the next Bitcoin?

Short Sellers Move In

Hedge funds smelled blood—turns out ‘growth at all costs’ works until it doesn’t. Same playbook as every overhyped IPO: pump, dump, repeat.

What’s Next?

Either a dead-cat bounce or a slow bleed. Meanwhile, retail bagholders are left staring at their portfolios—and their $15 grain bowls.

Image source: Cava.

Cava's momentum slows

The chain has delivered mostly blockbuster results since its 2023 IPO, but Cava's growth significantly slowed in the second quarter as same-store sales ROSE just 2.1%. The weak comparable sales growth comes at a time when much of the restaurant industry is struggling, as discretionary spending has pulled back due to fears around trade tensions.

Overall revenue was up 20.3% to $278.2 million thanks to a steady FLOW of new restaurant openings, but that missed the consensus at $285.2 million.

Average unit volume improved from $2.7 million to $2.9 million, a positive sign for the overall growth in the business, and restaurant-level profit margin was strong at 26.3%, down slightly from 26.5% in the quarter a year ago.

On the bottom line, adjusted earnings per share improved from $0.14 to $0.16, which beat expectations at $0.13.

CEO BRETT Schulman said, "During the second quarter of 2025, we continued to grow market share and firmly establish our category-defining leadership position."

What's next for Cava

Looking ahead, Cava also disappointed the market by cutting its guidance for the full year.

The company now sees same-store sales growth of 4%-6%, down from a previous range of 6%-8%. However, its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance remained the same at $152 million-$159 million.

Overall, the sell-off shouldn't be surprising due to the slowdown in sales and the guidance cut. However, the long-term outlook is still promising for Cava, as it expects to grow from around 400 restaurants currently to more than 1,000 by 2032. While the slowdown could last more than a quarter, it's not a reason for long-term investors to sell the stock.