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CAVA Group (CAVA +11%) is up sharply today following its Q3 results last night. This Mediterranean fast-casual restaurant chain beat on EPS and revenue. CAVA also increased its FY24 adjusted EBITDA outlook to $121-126 mln from $109-114 mln and raised FY24 comp guidance substantially to +12-13% from +8.5-9.5%. It also boosted its FY24 outlook for new openings to 56-58 from 54-57.

• What really jumped off the page were its huge comps of +18.1%, which were even better than Q2's +14.4%. Comps were driven by a +12.9% increase from guest traffic and a +5.2% increase from menu price and product mix. We always like to see comps driven by traffic rather than just price hikes because that means customers keep coming back. What's more, CAVA said it's seeing strong comps in every geography, suburban, urban, and all income cohorts.
• CAVA continues to see strong incidence in steak more than four months after its nationwide launch. It also launched its first ever new flavor variation on its beloved pita chip. Also, CAVA recently launched a reimagined loyalty rewards program, which launched earlier than planned. The program has been well-received. CAVA is also benefitting from increasing brand awareness, which is up 8 percentage points since the IPO and growing with each new launch.
• CAVA opened 11 net new restaurants during Q3 bringing its count to 352. On the heels of its successful market entry into Chicago, CAVA announced last night that it expects to enter South Florida early next year and expand its Midwest presence with at least two additional new markets in 2025. Its 2024 new restaurants are outperforming expectations and giving CAVA even more confidence about the portability of its category-defining brand.

Taking a step back, CAVA sees itself as the clear leader in Mediterranean cuisine. It sees itself as defining what is now emerging as America's next major cultural cuisine category. Modern consumers crave bold, adventurous flavors while also being increasingly mindful of their wellbeing. CAVA believes the category is at a tipping point as evidenced by its accelerating growth in each market and with every restaurant it opens.

What strikes us is that huge Q3 result was almost an exact repeat of what we saw in Q2 -- upside EPS/revs, huge comps, increased guidance for EBITDA and comps. Many other restaurant chains are struggling and are increasingly relying on value. However, CAVA seems to be bucking this trend as it boasts huge comps among all income cohorts. CAVA reminds us a bit as an early stage Chipotle (CMG). However, the stock does look over extended in the near term.