CAVA Group (NYSE: CAVA) crossed 500 restaurants ahead of schedule. Revenue climbed 22.1% to $356.4 million. Same-restaurant sales rose 3.1%. Diluted EPS hit $0.11.
That last figure missed by 56%. Revenue fell 32% short of the $526.7 million consensus. Net income slipped to $13.2 million from $14.7 million a year earlier.
The gap is partly structural. The $356.4 million figure reflects total company revenue; the CAVA segment alone contributed $353.7 million. Even that segment number trails the consensus by a wide margin, which likely baked in faster unit growth or higher average unit volumes. AUV of $3.1 million, up from $2.9 million a year ago, shows new restaurants are healthy. Just not healthy enough to close the gap.
Margin is where the pressure lives. CAVA Restaurant-Level Profit Margin contracted 120 basis points to 23.4%, down from 24.6% in Q3 2025. The release cites incremental labor investments, a heavier mix of third-party delivery, and repairs and maintenance. Third-party delivery drags the margin rate even as it adds margin dollars through higher guest prices. Cyclospora-related fresh produce concerns chipped 150 basis points off same-restaurant sales. Traffic still eked out slight growth.
Labor costs climbed to 26.0% of CAVA revenue from 25.5%, a 50-basis-point increase. Other operating expenses jumped to 13.8% from 13.1%, a 70-basis-point swing. These are not one-offs. The labor investment looks structural: the company is paying its teams more, and sales leverage is not fully absorbing the hit. The third-party delivery mix is a secular shift, not a seasonal blip.
General and administrative expenses rose to $38.1 million from $31.5 million, yet held flat at 10.7% of revenue. Excluding equity-based compensation and executive transition costs, G&A was 9.4% of revenue, unchanged from a year ago. Overhead is not outrunning the top line.
Full-year guidance sends mixed signals. Same-restaurant sales guidance lifted to 6.0%-7.0% from 4.5%-6.5%, a clear bet on brand momentum. Net new restaurant openings nudged up to 76-78 from 75-77. But pre-opening costs nearly doubled, to $28.5-$29.5 million from $22.0-$22.5 million, reflecting the price of more units. Restaurant-level profit margin guidance narrowed to 23.7%-24.0% from 23.7%-24.3%. Adjusted EBITDA guidance tightened to $184-$189 million from $181-$191 million, raising the floor but lowering the ceiling.
The margin compression is the story. CAVA is pouring money into labor and new units, and the P&L is showing it. Trading near-term margin for long-term scale works if the new restaurants keep performing. The Q3 miss against a consensus that expected more from unit growth and AUV suggests the market priced in a faster margin recovery than the company can deliver. The raised same-restaurant sales guidance helps. The margin guidance tells investors the cost pressures are sticking around.