Why Cava Stock Was Down 23% in Q1 as the S&P 500 Had Its Worst Quarter Since 2022

Company Overview - Cava Group is a fast-casual restaurant chain with 367 locations as of the end of 2024, showing potential for significant growth as it expands [2] - The company has been performing well, with a 33% year-over-year revenue increase in 2024, driven by a 13% increase in same-store sales [3] - Digital sales account for over 36% of total sales, indicating a strong integration of digital ordering in its business model [4] Financial Performance - Restaurant-level profit increased by 34%, with profit margin expanding by 0.2 percentage points to 25% [3] - Net income rose from $13.3 million to$130.3 million, and free cash flow turned positive at $52 million [3] Market Sentiment - Cava's stock fell 23% in Q1 2025 due to a less favorable outlook and market fears regarding a new tariff program [1][5] - Management projects same-store sales growth of about 7%, which is approximately half of the previous year's growth [5] - The stock currently trades at a forward one-year P/E ratio of 108, indicating it is not considered cheap in the current market environment [7]