What Are You Actually Paying For In Cava Stock?

Cava (CAVA) stock is down about 44% over the past three months, while the S&P 500 was roughly flat. A fall that size usually leaves something cheap behind. It has not here. Cava still trades at 88 times earnings against about 23 for the S&P 500, and much of what you are paying for is restaurants that are not open yet.

Why Is Cava Still Expensive After A Fall Like That?

Cava keeps 4.8% of revenue as net profit over the past twelve months, against 13.1% for the S&P 500. That margin is what the multiple is priced against, and it stays thin while the company spends to grow. Management expects overhead to rise in the third and fourth quarters of 2026.

The growth is real. Revenue rose 31.3% year over year in the second quarter of 2026. Same-restaurant sales rose 9% and traffic grew 5.3%, so more people are walking in.

Cava opened 17 net new restaurants in that quarter and finished with 476, and the new ones are exceeding the company’s expectations. Cava has guided to 75 to 77 net new restaurants for full-year 2026. Those unbuilt restaurants are much of what the multiple is quoting.

What Is Cava Spending Your Profit On?

Food, beverage and packaging costs rose as a share of revenue in the second quarter of 2026, largely on the input costs of launching Pomegranate Glazed Salmon. Labor costs rose largely on an incremental 3% wage investment in its team members. Other operating costs rose with a higher mix of third-party delivery.

Management expects food, beverage and packaging costs to keep climbing as a share of revenue through the rest of 2026, on fuel surcharges and the rollout of pre-marinated chicken. The chicken is meant to take prep work out of the kitchen, and the company says the freed hours will go to guests rather than a shorter schedule. Cava is spending margin to buy hospitality.

What Happens To You If Diners Back Away Again?

You have already seen it. An outbreak scare pushed consumers away from lettuce and fresh produce in July, and sales growth at Cava eased with that pullback, though the menu carries no iceberg lettuce. Same-restaurant sales slowed to flat or positive, then improved each week back to mid-single digits.

Cava reiterated its full-year 2026 guidance for 4.5% to 6.5% same-restaurant sales after that. Management also said hitting the low end of that range would mean slightly negative same-restaurant sales over the rest of 2026, and the upper end would mean mid-single digits, though its trends do not point to the low end. A produce scare nobody at Cava caused can move sales within weeks, and the multiple assumes they hold inside that range.

The next read comes with the third and fourth quarters of 2026. Seasonality tends to pull restaurant margins lower in the fourth quarter, and the pre-marinated chicken rollout lands in the back half of 2026. The decision is whether to pay that multiple for restaurants Cava has not opened yet, knowing a produce scare can dent the ones it has.

No single number settles this. Our five-factor stock scorecard ranks every stock on growth, profitability, stability, resilience and valuation.

So Do You Pay Up For Restaurants That Are Not Open Yet?

Perhaps, but only if you would still pay this price with same-restaurant sales at the 4.5% to 6.5% guided for 2026. If you would rather not make that call, hand it to us. Deciding what belongs in the Trefis High Quality Portfolio takes more than one question about one stock. That portfolio has a track record of outpacing the three major indices.