TD Cowen has maintained CAVA Group Inc. as a top pick, expressing continued confidence in the Mediterranean fast-casual chain despite a recent, temporary weakening in consumer traffic tied to industry publicity around Cyclospora. The firm did, however, trim near-term same-store sales assumptions for the latter half of fiscal 2026.
Cowen is still modeling 7% same-store sales growth for fiscal 2026 overall. The firm revised its estimates for the third and fourth quarters of fiscal 2026 to 4% and 5%, respectively, down from prior estimates of 5% and 5.2%.
Company management described a pause in momentum at the start of the third quarter, saying sales were flat to slightly positive amid negative publicity affecting the category. Importantly, management reported sequential improvement on a weekly basis, with the most recent week ending August 9 showing mid-single-digit percentage growth versus earlier weeks.
CAVA’s reported second-quarter results gave Cowen reason for optimism. The chain recorded 9.0% same-store sales for the quarter, comprised of 5.3% growth in traffic, a 1.4% benefit from price, and a 2.3% contribution from mix. That 9.0% figure topped Cowen’s 7.5% estimate and was noted as the strongest same-store sales performance among restaurants reporting during the June quarter earnings season. Adjusted EBITDA reached $54.7 million, exceeding Cowen’s $52.4 million forecast.
Management reaffirmed fiscal 2026 guidance, including a target of 75 to 77 net new restaurant openings, same-restaurant sales growth of 4.5% to 6.5%, and adjusted EBITDA between $181 million and $191 million. Restaurant-level margins were 25.7% in the second quarter, a result that fell within the range of analyst expectations.
Operationally, the company is emphasizing improvements under newly installed Chief Operating Officer Doug Thompson. Management reported that the April salmon menu launch performed in line with expectations and that mix remained steady through the quarter. The company is running a market test of shrimp in select locations and has introduced braised beef with a $3.70 upcharge in Philadelphia. CAVA also plans a second market test of catering later this fall.
TD Cowen pointed out that management retains marketing options should the sales rebound decelerate, even as the company continues to keep marketing spend at approximately 1% of sales - described as category-low.
Following the earnings release, several analysts adjusted price targets on CAVA Group Inc. RBC Capital increased its target, while KeyBanc, Guggenheim, DA Davidson, and Mizuho lowered theirs. The range of post-earnings ratings extended from Outperform to Neutral across these firms.
Market context and takeaways - CAVA’s second-quarter outperformance on traffic and adjusted EBITDA underpins Cowen’s bullish stance for the full fiscal year, even as near-term quarterly pacing was trimmed. Management’s operational initiatives - new leadership in operations, menu tests, and catering trials - are being positioned to support a return to sustained growth as weekly trends recover.