(Reuters) - Cava Group lifted its annual same-restaurant sales forecast on Tuesday, signaling that demand for its pita wraps and salad bowls was holding up well even as the wider restaurant industry grapples with a consumer spending slowdown.
Shares of the Mediterranean restaurant chain, which made its market debut in June last year, rose 13.1% after the bell. The stock has more than tripled in value so far this year.
Cava now expects 2024 same-restaurant sales growth of 12% to 13%, up from previous expectations of 8.5% to 9.5%. The fast-casual chain also exceeded third-quarter sales estimates.
The company's Mediterranean offerings coupled with its cautious approach to raising menu prices have been attracting younger crowds to its restaurants, even as fast-food chains such as McDonald's (NYSE:MCD) and Burger King have been embroiled in value wars to attract demand.
The company also completed a re-launch of its loyalty program in the reported quarter.
"We've seen great growth in brand awareness in Gen-Z and even Gen Alpha customer segments, given some of the momentum we have on social channels," said CEO Brett Schulman on a post-earnings call.
Foot traffic at Cava's restaurants grew 27.5% in the third quarter compared with a year ago, outpacing traffic growth of 2.2% for the overall fast-casual segment, according to data from Placer.ai.
"Cava is increasingly attracting a wider customer base — the median household income of its captured market has fallen steadily since 2021, and its visitor base increasingly includes younger consumer segments," said Placer.ai in a report from October.
The company also lifted its target for net new restaurant openings and restaurant-level profit margin.
Its third-quarter revenue rose 39% to $241.5 million, beating estimates of $233.6 million, according to data compiled by LSEG.