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What changed in CAVA GROUP, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CAVA GROUP, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+399 added−413 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-27)

Top changes in CAVA GROUP, INC.'s 2024 10-K

399 paragraphs added · 413 removed · 343 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur Suppliers As part of new suppliers’ onboarding, we review applicable food safety and quality programs as well as general insurance coverage as appropriate. We perform site visits to evaluate certain suppliers’ compliance with our food safety 9 Table of Contents standards and requirements.
Biggest changeThe CAVA Food Safety Council, which is comprised of independent outside food safety experts, also supplements the knowledge and experience of our FSQA team and advises us on key initiatives in our restaurants and manufacturing facilities. 10 Table of Contents Our Suppliers As part of new suppliers’ onboarding, we review applicable food safety and quality programs as well as general insurance coverage as appropriate.
We embrace, adjust, adapt. • Passion for Positivity - We greet each day with warmth and possibility. • Collective Ambition - We have high aspirations that are achieved when we work together with a shared purpose.
We embrace, adjust, and adapt. • Passion for Positivity - We greet each day with warmth and possibility. • Collective Ambition - We have high aspirations that are achieved when we work together with a shared purpose.
Our food safety and quality assurance (“FSQA”) team establishes and monitors our food safety programs and protocols and is responsible for reviewing and ensuring that our suppliers, our restaurants and restaurant Team Members, and our production facilities operate in compliance with our food safety standards and federal and state legal requirements. Our approach to food safety is interdepartmental.
Our food safety and quality assurance (“FSQA”) team establishes and monitors our food safety programs and protocols and is responsible for reviewing and ensuring that our suppliers, restaurants, restaurant Team Members, and production facilities operate in compliance with our food safety standards and federal and state legal requirements. Our approach to food safety is interdepartmental.
We face significant competition from national, regional, and locally-owned restaurants, including limited service restaurants, particularly within the fast-casual dining and traditional fast-food categories, who offer in-restaurant, carry-out, delivery, and/or catering services. We also compete with grocery stores, meal subscription services, and delivery kitchens, especially those that target guests who seek high-quality food.
We face significant competition from national, regional, and locally-owned restaurants, including limited service restaurants, particularly within the fast-casual dining and traditional fast-food categories, which offer in-restaurant, carry-out, delivery, and/or catering services. We also compete with grocery stores, meal subscription services, and delivery kitchens, especially those that target guests who seek high-quality food.
Our facility in Maryland holds a number of third-party certificates, including achieving a high rating based on the British Retail Consortium’s Global Standard for Food Safety, providing independent and external verification that our ingredients, food products, and/or processes comply with applicable food safety regulations and third-party standards.
Our production facility in Maryland holds a number of third-party certificates, including achieving a high rating based on the British Retail Consortium’s Global Standard for Food Safety, providing independent and external verification that our ingredients, food products, and/or processes comply with applicable food safety regulations and third-party standards.
We believe we are well positioned to benefit from the following strong and emerging trends: • Evolving consumer preferences for authentic and ethnic cuisine • Increased focus on health and wellness • Emphasis on combined quality and convenience We aim to create an industry-leading, category defining brand rooted in the following strategic pillars: Expand our Mediterranean Way in Communities Across the Country • Grow our footprint and expand multi-channel access • Fuel our culinary innovation and communication engine to drive traffic, mix, and check • Express the essence of our category-creating concept consistently across brand properties Develop Personal Relationships with Guests, Even as We Scale • Leverage our digital ecosystem to enable more personalized communication with guests • Reimagine and relaunch our loyalty offering to deepen our connections with guests and drive increased frequency • Create a cohesive physical and digital journey Run Great Restaurants, Every Location, Every Shift • Streamline and automate preparation to make our restaurants easier to run • Enhance our training and standards to consistently deliver our Mediterranean hospitality • Leverage technologies to increase automation and improve restaurant operations Operate As a High-Performing Team • Create a culture of growth and accountability • Use best-in-class data capabilities to unlock powerful, actionable insights • Implement programs and tools that engage, retain, and connect the organization Our Food - Where Taste and Health Unite Our menu fulfills a broad range of dietary preferences, from hearty and indulgent to vegan, vegetarian, gluten-free, dairy-free, paleo, keto, and nut-free diets.
We believe we are well positioned to benefit from the following strong and emerging trends: • Evolving consumer preferences for authentic and ethnic cuisine • Increased focus on health and wellness • Emphasis on combined quality and convenience We aim to create an industry-leading, category defining brand rooted in the following strategic pillars: Expand our Mediterranean Way in Communities Across the Country • Grow our footprint and expand multi-channel access • Fuel our culinary innovation and communication engine to drive traffic, mix, and check • Express the essence of our category-defining concept consistently across brand properties Develop Personal Relationships with Guests, Even as We Scale • Leverage our digital ecosystem to enable more personalized communication with guests • Deepen our connections with guests and drive increased frequency with our reimagined loyalty offering • Create a cohesive physical and digital journey Run Great Restaurants, Every Location, Every Shift • Streamline and automate preparation to make our restaurants easier to run • Enhance our training and standards to consistently deliver our Mediterranean hospitality • Leverage technologies to increase automation and improve restaurant operations Operate As a High-Performing Team • Create a culture of growth and accountability • Use best-in-class data capabilities to unlock powerful, actionable insights • Implement programs and tools that engage, retain, and connect the organization Our Food - Where Taste and Health Unite Our menu fulfills a broad range of dietary preferences, from hearty and indulgent to vegan, vegetarian, gluten-free, dairy-free, paleo, keto, and nut-free diets.
We are focused on creating, capturing, and retaining new demand by increasing our brand awareness while also building upon our existing value proposition to our guests. Brand Marketing Our diverse guest engagement touchpoints create an integrated guest experience ecosystem.
We are focused on creating, capturing, and retaining demand by increasing our brand awareness while also building upon our existing value proposition to our guests. Brand Marketing Our diverse guest engagement touchpoints create an integrated guest experience ecosystem.
We have formed a Team Member resource group, Allies in Motion (AIM), which encourages our Team Members to celebrate and learn about underrepresented groups to build a better world for our guests, other Team Members, and community.
We have a Team Member resource group, Allies in Motion (AIM), which encourages our Team Members to celebrate and learn about underrepresented groups to build a better world for our guests, other Team Members, and community.
Item 1. Business Our Mission To Bring Heart, Health, And Humanity To Food General CAVA Group, Inc. (together with its wholly owned subsidiaries, referred to as the “Company,” “CAVA,” “we,” “us,” and “our” unless specified otherwise) was formed as a Delaware corporation in 2015, and prior to that, the first CAVA restaurant opened in 2011 in Bethesda, Maryland.
Item 1. Business Our Mission To Bring Heart, Health, And Humanity To Food General CAVA Group, Inc. (together with its wholly owned subsidiaries, referred to as the “Company,” “CAVA,” “we,” “us,” and “our,” unless specified otherwise) was formed as a Delaware corporation in 2015, and prior to that, the first CAVA restaurant opened in 2011 in Bethesda, Maryland.
Additionally, our newly-opened production facility in Virginia will be evaluated under the same third-party standards. Competition The restaurant industry is highly competitive with respect to, among other things, food quality, and presentation, taste preferences, price, brand reputation, digital engagement, service, value, and location.
Additionally, our recently opened production facility in Virginia will be evaluated under the same third-party standards. Competition The restaurant industry is highly competitive with respect to, among other things, food quality and presentation, taste preferences, price, brand reputation, digital engagement, service, value, and location.
Real Estate Our market evaluation and site selection process is data-driven including reviewing characteristics such as geography, presence of peer brands, demographic and psychographic data, urban/suburban balance, foot- and vehicle-traffic, retail and daily needs, employment and daytime activity, adjacent retailers, and volume potential.
Real Estate Our market evaluation and site selection process is data-driven and includes reviewing characteristics such as geography, presence of peer brands, demographic and psychographic data, urban/suburban balance, foot- and vehicle-traffic, retail and daily needs, employment and daytime activity, adjacent retailers, and volume potential.
These facilities are licensed to produce and warehouse food products in their respective states, and are also registered with the Food and Drug Administration. Our production facilities’ processes and systems are designed to mitigate the risk of contamination and illness and help ensure compliance with applicable food safety regulations and standards.
These facilities are licensed to produce and warehouse food products in their respective states and are also registered with the U.S. Food and Drug Administration. Our production facilities’ processes and systems are designed to mitigate the risk of contamination and illness and help ensure compliance with applicable food safety regulations and standards.
We have designed our menu to offer vibrant flavors utilizing fresh, high-quality 6 Table of Contents ingredients inspired by our Mediterranean roots. We make it deliciously simple to eat well and feel good every day. Our guests can choose a chef-curated meal or a build-your-own-bowl or pita using our 38 ingredients with over 17.4 billion combinations.
We have designed our menu to offer vibrant flavors using fresh, high-quality ingredients inspired by our Mediterranean roots. Our guests can choose a chef-curated meal or a build-your-own-bowl or 7 Table of Contents pita using our 38 ingredients with over 17.4 billion combinations. We make it deliciously simple to eat well and feel good every day.
Any Team Members can apply for financial assistance in the event of an unexpected financial hardship. Utilizing food as a force for good, we cultivate relationships with our neighbors through local food-based non-profit groups.
Any Team Member can apply for financial assistance in the event of an unexpected financial hardship. Utilizing food as a force for good, we cultivate relationships with our neighbors through local food-based non-profit groups.
We also make available through the Investor Relations Section of our website other reports filed with or furnished to the SEC under the Exchange Act, including our proxy statements and reports filed by officers and directors under Section 16(a) of the Exchange Act, as well as our Code of Business Conduct and Ethics, Corporate Governance Guidelines and Board committee charters.
We also make available through the Investor Relations Section of our website other reports filed with or furnished to the SEC under the Exchange Act, including our proxy statements and reports filed by officers and directors 12 Table of Contents under Section 16(a) of the Exchange Act, as well as our Code of Business Conduct and Ethics, Corporate Governance Guidelines and Board committee charters.
Total Rewards We believe that recognition and rewards are key to a healthy and vibrant culture.
Total Rewards We believe recognition and rewards are key to a healthy and vibrant culture.
Talent Development Inspired by the Mediterranean Way and defined by a genuine expression of hospitality and warmth, we want our Team Members – who carry on the CAVA culture every day – to build a career and not merely find employment.
Talent Development Inspired by our Mediterranean Way and defined by a genuine expression of hospitality and warmth, we want our Team Members – who are vital to our growth and carry on the CAVA culture every day – to build a career, not merely find employment.
These strategic investments serve to provide us several key advantages, including the ability to create our signature dips and spreads with quality, consistency, and efficiency with the adoption of facilities and capabilities that are difficult to replicate. Sustainability Since our beginning, we have been committed to the well-being of people and the planet.
We believe these strategic investments give us several key advantages, including the ability to create our signature dips and spreads with quality, consistency, and efficiency with the adoption of facilities and capabilities that are difficult to replicate. Sustainability Since our beginning, we have been committed to the well-being of people and the planet.
In the United States, we have obtained trademark registrations for key trademarks including CAVA, CRAZY FETA, SPLENDIDGREENS, and CAVA DIGITAL KITCHEN. We are currently pursuing additional trademark registrations in the United States and will continue to pursue additional trademark registrations to the extent we believe they would be beneficial and cost-effective.
In the United States, we have obtained trademark registrations for key trademarks including CAVA, CRAZY FETA, SPLENDIDGREENS, and CAVA DIGITAL KITCHEN. We are currently pursuing additional trademark 11 Table of Contents registrations in the United States and will continue to pursue additional trademark registrations to the extent we believe they would be beneficial and cost-effective.
We also own two issued patents in the United States, which cover various features relating to our sentence builder system and walk-the-line functionality used in the CAVA app.
We also own three issued patents in the United States, which cover various features relating to our sentence builder system, walk-the-line functionality, and other functionality used in the CAVA app.
Starting in our restaurants, we work to create clear development paths for all of our Team Members, so they can have not just a good job, but the opportunity to build a great career. We have also created our non-profit “Goodness Fund” that 8 Table of Contents allows all Team Members to help one another, in partnership with company contributions.
Starting in our restaurants, we work to create clear development paths for all of our Team Members, so they can have not just a good job, but the opportunity to build a great career. We have also created our non-profit Goodness Fund that allows all Team Members to help one another, in partnership with company contributions.
Difficulties or failure to maintain or obtain the required licenses and approvals could adversely affect our existing restaurants and delay or result in our decision to cancel the opening of new restaurants, which would adversely affect our business. Our operations are subject to the U.S.
Difficulties or failure to maintain or obtain the required licenses and approvals could adversely affect our existing restaurants and delay or result in our decision to cancel the opening of new restaurants, which would adversely affect our business. Our operations are subject to the U.S. Occupational Safety and Health Act, which governs worker health and safety, the U.S.
To align incentives and increase accountability, adherence to food safety standards at restaurants are taken into account in determining the compensation of our General Managers, Academy General Managers, and other restaurant operations leaders. Our Pro duction Facilities We operate two production facilities, one in Maryland and one in Virginia that we recently opened in February 2024.
To align incentives and increase accountability, adherence to food safety standards at restaurants is taken into account in determining the compensation of our General Managers, Academy General Managers, and other restaurant operations leaders. Our Pro duction Facilities We operate two production facilities, one in Maryland and one in Virginia.
We also leverage our large social media following and frequently advertise our new restaurant openings on social media channels, and from time to time deliver flyers and menus to the homes and offices in the neighborhood to drive awareness and excitement.
We also leverage our large social media following and frequently advertise our new restaurant openings on social media channels. We routinely announce new restaurants and Community Days to local media, and from time to time deliver flyers and menus to the homes and offices in the neighborhood to drive awareness and excitement.
They are: • Generosity First, Always - We lead with kindness. Our best work happens when we act in service of others. • Constant Curiosity - We are eager to learn, grow, and explore beyond the obvious. • Act with Agility - We welcome change; it’s the only constant.
Our best work happens when we act in service of others. • Constant Curiosity - We are eager to learn, grow, and explore beyond the obvious. • Act with Agility - We welcome change; it’s the only constant.
Our CAVA Digital Revenue Mix was 36.0% and 34.5% in fiscal 2023 and 2022, respectively. We are in the early stages of our catering program and plan to expand our catering capabilities to more CAVA locations around the country by leveraging our kitchen production. Quality and Food Safety We are deeply committed to food safety.
Our CAVA Digital Revenue Mix was 36.4% and 36.0% in fiscal 2024 and 2023, respectively. We are in the early stages of our catering program and plan to expand our catering capabilities to more CAVA restaurants around the country by leveraging our kitchen production in 2025. Quality and Food Safety We are deeply committed to food safety.
We offer our Team Members competitive compensation and benefits including: • medical, dental, and vision insurance for full-time Team Members and a mini-medical plan for part-time Team Members including office visits, telemedicine, behavioral health, and prescription discounts, among other items; • 401K matching; • an employee stock purchase plan that provides virtually all of our Team Members an ownership opportunity; • an Employee Assistance Program that covers paid mental health benefits and counseling for all Team Members and their household members, elder care services, alcohol and drug dependency programs, continuing education and college planning, marriage and relationship counseling, relocation guidance and family planning assistance; • continuing education including a tuition discount program in partnership with University of Maryland Global Campus for any Team member wanting to further their education; • financial assistance for adoption and family planning through our Well Being program for all Team Members; • free meals to all Team Members during working hours and discounted meals outside of working hours; • short- and long-term incentive programs for Team Members who hold a position above General Manager, including Team Members within manufacturing and our Collaboration Center Organization, while our General Managers participate in a short-term incentive program. 7 Table of Contents Creating an Inclusive Culture Guided by the skills and insights of our Team Members, we’re intentional about bringing down barriers and creating a more inclusive world where everyone is welcome at our table.
We offer our Team Members competitive compensation and benefits including: • medical, dental, and vision insurance for full-time Team Members and a mini-medical plan for part-time Team Members including office visits, telemedicine, behavioral health, and prescription discounts, among other items; • 401K matching; • an employee stock purchase plan that gives virtually all our Team Members an ownership opportunity; • an Employee Assistance Program that covers paid mental health benefits and counseling for all Team Members and their household members, elder care services, alcohol and drug dependency programs, continuing education and college planning, marriage and relationship counseling, relocation guidance, and family planning assistance; • continuing education, including a tuition discount program in partnership with University of Maryland Global Campus for any Team Member wanting to further their education; • financial assistance for adoption and family planning through our Well Being program for all Team Members; • free meals to all Team Members during working hours and discounted meals outside of working hours; and • short- and long-term incentive programs for Team Members who hold a position above General Manager, including Team Members within manufacturing and our Collaboration Center Organization, while our General Managers participate in a short-term incentive program.
In addition, on average, we rank in the top quintile within the diversity and inclusion category, based on our Team Members’ responses to our 2023 Team Member engagement survey conducted by Denison Consulting.
In addition, on average, we rank in the top quintile within the diversity and inclusion category, based on our Team Members’ responses to our 2024 Team Member engagement survey.
We expect that our production facilities will support at least 750 restaurants, as well as our Consumer Packaged Goods (“CPG”) business, with the potential to add additional capacity over time.
We expect that our production facilities will support at least 750 restaurants, as well as our CPG business, with the potential to add capacity over time.
Our restaurants generally range from 2,000 to 3,000 square feet in size and seat approximately 35 to 55 guests indoors. As of December 31, 2023, we offered drive-thru pick-up at 30 locations.
Our restaurants generally range from 2,000 to 3,000 square feet in size and seat approximately 30 to 60 guests indoors. As of December 29, 2024, we offered drive-thru pick-up at 53 locations.
CAVA’s Annual Report on Form 10-K reports, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act, as amended (the “Exchange Act”), are publicly available free of charge on the Investor Relations section of our website at investor.cava.com or at www.sec.gov as soon as reasonably practicable after these materials are filed with or furnished to the SEC.
We completed our initial public offering (“IPO”) in June 2023 and our common stock is listed on the New York Stock Exchange under the symbol “CAVA.” CAVA’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act, as amended (the “Exchange Act”), are publicly available free of charge on the Investor Relations section of our website at investor.cava.com or at www.sec.gov as soon as reasonably practicable after these materials are filed with or furnished to the SEC.
We are also subject to the Americans with Disabilities Act of 1990 and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public accommodations, and other areas, including our restaurants, website, and smartphone applications.
We are also subject to the Americans with Disabilities Act of 1990 and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public accommodations, and other areas, including our restaurants, website, and smartphone applications. For a discussion of the various risks we face from regulation and compliance matters, see Item 1A.
We are dedicated to working with and sourcing our products from farmers and suppliers who share our values. We strive to use clean label-friendly ingredients, source dairy products from farmers who don’t treat their cows with rbST, and serve only antibiotic-free proteins.
We care deeply about the quality of our food, where it comes from, and how it’s created. We are dedicated to working with and sourcing our products from farmers and suppliers who share our values. We strive to use clean label-friendly ingredients, source dairy products from farmers who don’t treat their cows with rbST, and serve only antibiotic-free proteins.
Our Community Days allow us to better engage with our community and share the Mediterranean Way with new and existing guests. Our authentic engagement with the communities we serve reinforces our mission and drives interest and excitement for our brand, which in turn helps to attract guests and support the strong performance of our restaurants.
Our Community Days help us share our Mediterranean Way with new and existing guests and authentically engage with the communities we serve by partnering with and showcasing local organizations and charities. This work reinforces our mission and drives interest and excitement for our brand, which in turn helps to attract guests and support the strong performance of our restaurants.
Furthermore, we periodically review certain suppliers’ compliance with their own internal processes and review their third-party audits. Our Restaurants To enhance our compliance with food safety and other regulatory requirements, our restaurants use customizable technology, giving us the flexibility to design and implement processes tailored to our specific needs.
Our Restaurants To enhance our compliance with food safety and other regulatory requirements, our restaurants use customizable technology, giving us the flexibility to design and implement processes tailored to our specific needs.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Corporate and Available Information We were incorporated in 2015 in Delaware. Our principal offices, which we refer to as our restaurant collaboration center, are located at 14 Ridge Square NW, Suite 500, Washington, D.C. and our telephone number is (202) 400-2920. Our website address is www.cava.com.
Our principal offices, which we refer to as our restaurant collaboration center, are located at 14 Ridge Square NW, Suite 500, Washington, D.C. and our telephone number is (202) 400-2920. Our website address is www.cava.com.
When we open a new restaurant, we host “Community Days,” where we provide free meals, and suggest and match donations to benefit local nonprofit partners that focus on underserved neighborhoods. We care deeply about the quality of our food, where it comes from, and how it’s created.
When we open a new restaurant, we host “Community Days,” where we provide free meals, and suggest and match donations to benefit local nonprofit partners that focus on underserved neighborhoods.
People and Culture As of December 31, 2023, we employed approximately 8,100 Team Members in our restaurants and 360 within manufacturing and our Collaboration Center Organization.
People and Culture As of December 29, 2024, we employed approximately 10,300 Team Members in our restaurants and 390 within manufacturing and our Collaboration Center Organization.
We have a highly engaged team as evidenced by our Employee Net Promoter Score in the top quartile, which indicates a high level of engagement according to Denison Consulting, which conducted our 2023 Team Member engagement survey. Our Values We maintain a core set of values that guide the organization and our culture.
Our Employee Net Promoter Score indicates we have a highly engaged team according to Denison Consulting, which conducted our 2024 Team Member engagement survey. Our Values We maintain a core set of values that guide the organization and our culture. They are: • Generosity First, Always - We lead with kindness.
A key component of our Team Member development pipeline includes a nationwide training network led by our 55 Academy General Managers (including those promoted to Multi-Unit Leaders), who represent leaders that we have identified as achieving strong operational and financial results at the restaurants they operate.
We continuously nurture our talent-rich pipeline by offering a clear promotional track for Team Members to become General Managers. A key component of our Team Member development pipeline includes a nationwide training network led by our Academy General Managers, who we have identified as achieving strong operational and financial results at the restaurants they operate.
In select markets, we are currently piloting CAVA digital kitchens to serve as centralized production hubs, and CAVA hybrid kitchens where we believe there is strong demand for our catering services. Our acquisition of Zoes Kitchen in 2018 allowed us to rapidly expand in new and existing markets by converting Zoes Kitchen locations to our CAVA brand.
In select markets, we operate CAVA digital kitchens to serve as centralized production hubs and are currently piloting CAVA hybrid kitchens where we believe there is strong demand for our catering services.
A continuation patent application has been filed that seeks to further broaden the scope of protection for features included in the CAVA 10 Table of Contents app and which seeks more expansive coverage for the walk-the-line functionality.
A further continuation patent application has been filed that seeks to further broaden the scope of protection for features included in the CAVA app and which seeks more expansive coverage for the walk-the-line functionality and other functionality. In addition, we have registered the cava.com domain name, which we use in connection with our primary online platform.
We also use our website as a tool to disclose important information about the company and comply with our disclosure obligations under Regulation Fair Disclosure. The information on our website (or any webpages referenced in this Annual Report on Form 10-K) is not part of this or any other report CAVA files with, or furnishes to, the SEC.
The information on our website (or any webpages referenced in this Annual Report on Form 10-K) is not part of this or any other report CAVA files with, or furnishes to, the SEC.
For a discussion of the various risks, we face from regulation and compliance matters, see “Risk Factors—Risks Related to Legal and Governmental Regulation” for more information. Seasonality Seasonal factors influencing our business are described under the heading “Fiscal Calendar and Seasonality” in Part II, Item 7.
“Risk Factors—Risks Related to Legal and Governmental Regulation” for more information. Seasonality Seasonal factors influencing our business are described under the heading “Fiscal Calendar and Seasonality” in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Corporate and Available Information We were incorporated in 2015 in Delaware.
We intend to make any legally required disclosures regarding amendments to, 11 Table of Contents or waivers of, provisions of our Code of Conduct on our website rather than by filing a Current Report on Form 8-K.
We intend to make any legally required disclosures regarding amendments to, or waivers of, provisions of our Code of Conduct on our website rather than by filing a Current Report on Form 8-K. We also use our website as a tool to disclose important information about the company and comply with our disclosure obligations under Regulation Fair Disclosure.
Our guests span gender lines and age groups, with a strong Millennial and a growing Gen Z contingent, as well as all income brackets. The broad appeal of our brand is evidenced by substantial diversity across geographies, formats, dayparts, and channels.
Business Strategy We believe that our differentiated offerings and broad appeal give us significant opportunity in the Mediterranean and health and wellness food categories. Our guests span age groups, genders, and income brackets with a strong Millennial and a growing Gen Z contingent. The broad appeal of our brand is evidenced by substantial diversity across geographies, formats, dayparts, and channels.
As of December 31, 2023, we operate 309 fast-casual CAVA restaurants in 24 states and Washington, D.C. The number of CAVA restaurants excludes two locations operating under a licensing arrangement and digital kitchens. The Company’s authentic Mediterranean cuisine unites taste and health, with a menu that features chef-crated and customizable bowls and pitas.
As of December 29, 2024, we operate 367 fast-casual CAVA Restaurants in 25 states and Washington, D.C. The Company’s authentic Mediterranean cuisine unites taste and health, with a menu that features chef-curated and customizable bowls and pitas. Our dips, spreads, and dressings are centrally produced and sold in grocery stores.
To secure any potential sourcing needs well in advance of our growth, we continually evaluate the strength and diversity of our supply chain. Manufacturing and Distributing We currently operate a 30,000-square-foot production facility in Laurel, Maryland, and we recently commenced operations at a state-of-the-art 55,000-square-foot production facility in Verona, Virginia in February 2024.
To secure any potential sourcing needs well in advance of our growth, we continually evaluate the strength and diversity of our supply chain.
We also use a seasonal framework to generate excitement around new menu offerings several times a year. Restaurant Marketing We strive to provide our guests with the warm and welcoming feeling of the Mediterranean with each visit to our restaurants.
We also use a seasonal framework to generate excitement around new menu offerings several times a year. We recently launched our reimagined loyalty program nationwide with the goal of deepening personal relationships with guests, even as we scale.
We are strongly committed to supporting and engaging all Team Members. Diversity cultivation is one of the seven core competencies we use to evaluate a Team Member's performance on an ongoing basis, which includes leveraging thoughts and insights of all Team Members.
Diversity cultivation is one of seven core competencies we use to highlight the behaviors we expect of Team Members, which includes leveraging thoughts and insights of all Team Members. In addition, inclusivity is a hallmark of several of our other core competencies, such as enterprise leadership, service mindset, and people development.
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Our dips, spreads, and dressings are centrally produced and sold in grocery stores. Business Strategy We believe that our differentiated offerings and broad appeal give us significant opportunity in the Mediterranean and health and wellness food categories.
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Creating an Inclusive Culture Guided by the skills and insights of our Team Members, we’re intentional about bringing down barriers and creating a more inclusive world where everyone is welcome at our table. 8 Table of Contents We are strongly committed to supporting and engaging all Team Members.
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We continuously nurture our talent-rich pipeline by offering a clear promotional track for Team Members to become General Managers, with a goal of internally placing more than 75% of our new General Manager positions, which we achieved in fiscal 2023.
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Many of our 2025 restaurant openings in new markets will incorporate elements of our new Project Soul design, which, in addition to convenience, expresses our Mediterranean hospitality and taps into guests’ desire for human connection, including softer seating, more greenery and a warmer brand pallet.
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In total, we opened 153 conversion restaurants, and, as of March 2, 2023, we no longer operate Zoes Kitchen locations. Our conversion strategy concluded on October 20, 2023 with the final conversion restaurant opening.
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Manufacturing and Distribution We operate a 30,000-square-foot production facility in Laurel, Maryland, a state-of-the-art 55,000-square-foot production facility in Verona, Virginia, and a 4,000-square-foot distribution facility in Edison, New Jersey, which we use primarily for CPG distribution in the Northeast.
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Multiple patent applications are being considered that are intended to further broaden the scope of protection for features included in the CAVA app and to protect new features that may be included in the CAVA app in the future. In addition, we have registered the cava.com domain name, which we use in connection with our primary online platform.
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We launched a national food donation program in the fall of 2023 to donate fresh, healthy, and delicious unused food prepared during each new 9 Table of Contents restaurant’s training period to local community members. This work is part of our commitment to fighting hunger and reducing food waste.
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Occupational Safety and Health Act, which governs worker health and safety, as well as rules and regulations relating to the COVID-19 pandemic, the U.S.
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Our reimagined loyalty program includes an earn and bank points model with a menu of reward redemption options, from our freshly made juices to entrées. Since its launch, loyalty sales have grown more than 2%.
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We completed our initial public offering (“IPO”) in June 2023 and our common stock is listed on the New York Stock Exchange under the symbol “CAVA”.
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This initial phase of a multi-phased approach will grow our first-party data and help us share our Mediterranean hospitality across platforms in ways that resonate with guests on a personal level. Restaurant Marketing We strive to give our guests the warm and welcoming feeling of the Mediterranean with each visit to our restaurants.
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We perform site visits to evaluate certain suppliers’ compliance with our food safety standards and requirements. In addition, we periodically review certain suppliers’ compliance with their own internal processes and review their third-party audits.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

177 edited+31 added−38 removed260 unchanged
Biggest changeIf our efforts are not successful, or if there is a significant shift in guest demand away from our menu or CPG offerings, our business could be adversely affected. 16 Table of Contents If we are unable to accurately predict guest trends and demand and successfully introduce new menu offerings and improve our existing menu offerings, our brand, business, financial condition, and results of operations may be materially adversely affected.
Biggest changeIf we are unable to accurately predict guest trends and demand and successfully introduce new menu offerings and improve our existing menu offerings, our brand, business, financial condition, and results of operations may be materially adversely affected. We are subject to risks associated with leasing property. We operate all of our restaurants in leased facilities.
Many of our competitors have been operating for longer and have a more established market presence than us, and have better locations, greater name recognition and resources than we do, and, as a result, these competitors may be better positioned to attract guests.
Many of our competitors have been operating for longer and have a more established market presence than us, and may have better locations, greater name recognition and resources than we do, and, as a result, these competitors may be better positioned to attract guests.
If our competitors increase spending on marketing and advertising, if our funds available for marketing funds decrease, if our marketing strategies or pricing methodologies are less effective than those of our competitors, or if we are otherwise unable to adequately respond to changes in our competitors’ marketing strategies, our business, financial condition, and results of operations may be adversely impacted.
If our competitors increase spending on marketing and advertising, if our funds available for marketing decrease, if our marketing strategies or pricing methodologies are less effective than those of our competitors, or if we are otherwise unable to adequately respond to changes in our competitors’ marketing strategies, our business, financial condition, and results of operations may be adversely impacted.
We rely in part on price increases from time to time to offset cost increases, including the cost of ingredients, commodities, insurance, labor, marketing, taxes, real estate and other key operating costs, and improve the profitability of our business.
We rely in part on price increases from time to time to offset cost increases, including the cost of ingredients, commodities, insurance, labor, marketing, taxes, real estate and other key operating costs, and to improve the profitability of our business.
From time to time, there may be changes in our senior management team, which could disrupt our business, particularly if non-compete clauses in employment agreements are deemed to be unenforceable for any reason, including as a result of regulatory restrictions.
From time to time, there may be changes in our senior management team, which could disrupt our business, particularly if any non-compete clauses in employment agreements are deemed to be unenforceable for any reason, including as a result of regulatory restrictions.
While we continue to make significant investment in physical and technological security measures, Team Member training, and third-party services designed to anticipate cyber-attacks and prevent breaches, our information technology networks and infrastructure, and those of third parties with which we have business relationships, could be vulnerable to damage, disruptions, shutdowns, or breaches of personal or confidential information.
While we continue to make significant investment in physical and technological security measures, Team Member training, and third-party services designed to anticipate cyber-attacks and prevent breaches, our information technology networks and infrastructure, and those of third parties with which we have business relationships, could be vulnerable to attacks, damage, disruptions, shutdowns, or breaches of personal or confidential information.
This provision will make it more difficult for a person who would be an “interested stockholder” to effect various business combinations with the Company for a three-year period. These anti-takeover provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many of our stockholders.
This provision will make it more difficult for a person who would be an “interested stockholder” to effect various business combinations with our company for a three-year period. These anti-takeover provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many of our stockholders.
Our Credit Facility restricts, subject to certain exceptions, among other things, our ability and the ability of our subsidiaries to: • incur additional indebtedness and guarantee indebtedness; • prepay, redeem, or repurchase certain debt; • create or incur liens; • make investments and loans; • pay dividends or make other distributions, in respect of, or repurchase or redeem, capital stock; • engage in mergers, consolidations, or sales of all or substantially all of our assets; • sell or otherwise dispose of assets; • amend, modify, waive, or supplement certain subordinated indebtedness to the extent such amendments would be materially adverse to the interests of the lenders; and • engage in certain transactions with affiliates.
Our 2022 Credit Facility restricts, subject to certain exceptions, among other things, our ability and the ability of our subsidiaries to: • incur additional indebtedness and guarantee indebtedness; • prepay, redeem, or repurchase certain debt; • create or incur liens; • make investments and loans; • pay dividends or make other distributions, in respect of, or repurchase or redeem, capital stock; • engage in mergers, consolidations, or sales of all or substantially all of our assets; • sell or otherwise dispose of assets; • amend, modify, waive, or supplement certain subordinated indebtedness to the extent such amendments would be materially adverse to the interests of the lenders; and • engage in certain transactions with affiliates.
We face significant competition from national, regional, and locally-owned restaurants, including limited service restaurants, particularly within the fast-casual dining and traditional fast-food categories, who offer in-restaurant, carry-out, delivery, and/or catering services. We also compete with grocery stores, convenience stores, meal subscription services, and delivery kitchens, especially those that target guests who seek high-quality food.
We face significant competition from national, regional, and locally-owned restaurants, including limited service restaurants, particularly within the fast-casual dining and traditional fast-food categories, which offer in-restaurant, carry-out, delivery, and/or catering services. We also compete with grocery stores, convenience stores, meal subscription services, and delivery kitchens, especially those that target guests who seek high-quality food.
See “—Risks Related to Our Indebtedness—The Credit Facility contains restrictions on our ability to operate our business and to pursue our business strategies.” Borrowings under the Credit Facility bear interest at variable rates based on prevailing conditions in the financial markets, and changes to such variable market rates may affect both the amount of cash we must pay for interest as well as our reported interest expense.
See “—Risks Related to Our Indebtedness—Our 2022 Credit Facility contains restrictions on our ability to operate our business and to pursue our business strategies.” Borrowings under the 2022 Credit Facility bear interest at variable rates based on prevailing conditions in the financial markets, and changes to such variable market rates may affect both the amount of cash we must pay for interest as well as our reported interest expense.
We would also face increased risks relating to shortage of delivery personnel in our markets, accidents, or other incidents involving delivery personnel while delivering our food, and any errors or delays in providing delivery services to our guests could result in a failure to meet our guests’ expectations and have an adverse impact on our business and brand.
We also face increased risks relating to any shortage of delivery personnel in our markets, accidents, or other incidents involving delivery personnel while delivering our food, and any errors or delays in providing delivery services to our guests could result in a failure to meet our guests’ expectations and have an adverse impact on our business and brand.
Each new location requires that we take into account numerous factors in order to be profitable, such as: • negotiating leases with acceptable terms; • obtaining licenses, permits, and approvals on a timely basis; • complying with applicable zoning, land use, environmental, health and safety, and other governmental rules and regulations (including interpretations of such rules and regulations); • unforeseen engineering or environmental problems; • proximity of a potential location to an existing location; • identifying, hiring, and training qualified Team Members to meet staffing needs; • local economic trends, population density, and area demographics; and 13 Table of Contents • longer permitting or inspection cycles and availability of construction and restaurant equipment and services.
Each new location requires that we take into account numerous factors in order to be profitable, such as: • negotiating leases with acceptable terms; • obtaining licenses, permits, and approvals on a timely basis; • complying with applicable zoning, land use, environmental, health and safety, and other governmental rules and regulations (including interpretations of such rules and regulations); 14 Table of Contents • unforeseen engineering or environmental problems; • proximity of a potential location to an existing location; • identifying, hiring, and training qualified Team Members to meet staffing needs; • local economic trends, population density, and area demographics; and • longer permitting or inspection cycles and availability of construction and restaurant equipment and services.
In addition, increasing prices could negatively affect the loyalty of our existing guest base and cause them to reduce their spending with us or impact our ability to attract new guests, particularly as we expand our footprint into new geographies where guests might have greater price sensitivity.
In addition, increasing prices could negatively affect the loyalty of our existing guest base and cause guests to reduce their spending with us or impact our ability to attract new guests, particularly as we expand our footprint into new geographies where guests might have greater price sensitivity.
Our business and ability to acquire, retain, and serve our guests are highly dependent upon the reliable performance of our website and the CAVA app and the underlying network and server infrastructure. Our in-restaurant and online and mobile ordering businesses depend on the performance and reliability of internet, mobile, and other infrastructures that are not under our control.
Our business operations and our ability to acquire, retain, and serve our guests are highly dependent upon the reliable performance of our website and the CAVA app and the underlying network and server infrastructure. Our in-restaurant and online and mobile ordering businesses depend on the performance and reliability of internet, mobile, and other infrastructures that are not under our control.
If there were an event of default under the Credit Facility, the lenders under the Credit Facility could cause all amounts outstanding with respect to that debt to be due and payable immediately. Our assets or cash flow may not be sufficient to fully repay borrowing under the Credit Facility if accelerated upon an event of default.
If there were an event of default under the 2022 Credit Facility, the lenders under the 2022 Credit Facility could cause all amounts outstanding with respect to that debt to be due and payable immediately. Our assets or cash flow may not be sufficient to fully repay borrowing under the 2022 Credit Facility if accelerated upon an event of default.
Such regulatory structures, have in the past, and may in the future, result in increased costs, both in terms of ongoing compliance and resolution of alleged violations. We face many of these same risks with respect to the Team Members who work within our Collaboration Center Organization departments.
Such regulatory structures have in the past and may in the future, result in increased costs, both in terms of ongoing compliance and resolution of alleged violations. We face many of these same risks with respect to the Team Members who work within our Collaboration Center Organization.
Our quarterly financial results may fluctuate significantly, including due to factors that are not in our control, and could fail to meet investors’ expectations for various reasons, including: • negative publicity about the safety of our food, packaging, employment-related issues, litigation, or other issues involving our restaurants; • fluctuations in supply costs, including as a result of inflation, particularly for our most significant ingredients, and our inability to offset the higher cost with price increases without adversely impacting guest spending; • labor availability and wages of Team Members, including as a result of inflation; • increases in marketing or promotional expenses; • the timing of new restaurant openings and related revenue and expenses, such as increased labor expenses, and the operating costs at newly opened restaurants; • the impact of inclement weather and natural disasters, such as freezes and droughts, which could decrease sales volumes and increase the costs of ingredients; • the amount and timing of equity-based compensation; • litigation, settlement costs, and related legal expenses; • tax expenses, asset impairment charges, and non-operating costs; and 32 Table of Contents • variations in general economic conditions and events, including the impact of inflation and recent turmoil in the banking industry.
Our quarterly financial results may fluctuate significantly, including due to factors that are not in our control, and could fail to meet investors’ expectations for various reasons, including: • negative publicity about the safety of our food, packaging, employment-related issues, litigation, or other issues involving our restaurants; • fluctuations in supply costs, including as a result of inflation, particularly for our most significant ingredients, and our inability to offset the higher cost with price increases without adversely impacting guest spending; • labor availability and wages of Team Members, including as a result of inflation; • increases in marketing or promotional expenses; • the timing of new restaurant openings and related revenue and expenses, such as increased labor expenses, and the operating costs at newly opened restaurants; • the impact of inclement weather and natural disasters, such as freezes and droughts, which could decrease sales volumes and increase the costs of ingredients; • the amount and timing of equity-based compensation; • litigation, settlement costs, and related legal expenses; • tax expenses, asset impairment charges, and non-operating costs; and • variations in general economic conditions and events, including the impact of inflation and recent turmoil in the banking industry.
In such event, our ability to operate and compete effectively, and our ability to execute on our growth strategies, could be adversely affected, which in turn would have an adverse impact on our business, results of operations and financial condition. Our Credit Facility contains restrictions on our ability to operate our business and to pursue our business strategies.
In such event, our ability to operate and compete effectively, and our ability to execute on our growth strategies, could be adversely affected, which in turn would have an adverse impact on our business, results of operations and financial condition. Our 2022 Credit Facility contains restrictions on our ability to operate our business and to pursue our business strategies.
In addition, the opening of new restaurants in or near markets in which we already have a restaurant could adversely affect sales at existing restaurants, particularly in markets where we have a high concentration of restaurants, such as the Washington, D.C./Maryland/Virginia metropolitan area.
In addition, the opening of new restaurants in or near markets in which we already have a restaurant could adversely affect sales at existing restaurants, particularly in markets in which we have a high concentration of restaurants, such as the Washington, D.C./Maryland/Virginia metropolitan area.
Our failure to comply with the Credit Facility, including as a result of events beyond our control, could result in an event of default that could materially adversely affect our business, financial condition, and results of operations.
Our failure to comply with the 2022 Credit Facility, including as a result of events beyond our control, could result in an event of default that could materially adversely affect our business, financial condition, and results of operations.
These provisions will provide for, among other things: • a classified board of directors, as a result of which our Board of Directors will be divided into three classes, with each class serving for staggered three-year terms; • the ability of our Board of Directors to issue one or more series of preferred stock; • advance notice requirements for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; • certain limitations on convening special stockholder meetings; • the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2 / 3 % of the shares of common stock entitled to vote generally in the election of directors; and • the required approval of at least 66 2 / 3 % of the voting power of the outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, to adopt, amend, or repeal certain provisions of our amended and restated certificate of incorporation.
These provisions will provide for, among other things: • a classified board of directors, as a result of which our Board of Directors will be divided into three classes, with each class serving for staggered three-year terms; • the ability of our Board of Directors to issue one or more series of preferred stock; 38 Table of Contents • advance notice requirements for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; • certain limitations on convening special stockholder meetings; • the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2 / 3 % of the shares of common stock entitled to vote generally in the election of directors; and • the required approval of at least 66 2 / 3 % of the voting power of the outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, to adopt, amend, or repeal certain provisions of our amended and restated certificate of incorporation.
The regulations are often complex to administer and have evolved over time and may continue to do so. Furthermore, similar legislation may be enacted in other jurisdictions in which we operate, and in jurisdictions where we may enter in the future.
The regulations are often complex to administer and have evolved over time and may continue to do so. Furthermore, similar legislation may be enacted in other jurisdictions in which we operate, and in jurisdictions we may enter in the future.
Our amended and restated certificate of incorporation provides that unless we consent to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or if such court does not have jurisdiction, another state or the federal courts (as appropriate) located within the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of the Company, (ii) action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, or other employee, or stockholder of the Company to the Company or our stockholders, (iii) action asserting a claim against the Company or any current or former director or officer of the Company arising pursuant to any provision of the DGCL, or our amended and restated certificate of incorporation or our amended and restated bylaws or as to which the DGCL confers jurisdiction on the Court of 38 Table of Contents Chancery of the State of Delaware, or (iv) action asserting a claim governed by the internal affairs doctrine of the State of Delaware.
Our amended and restated certificate of incorporation provides that unless we consent to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or if such court does not have jurisdiction, another state or the federal courts (as appropriate) located within the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of the Company, (ii) action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, or other employee, or stockholder of the Company to the Company or our stockholders, (iii) action asserting a claim against the Company or any current or former director or officer of the Company arising pursuant to any provision of the DGCL, or our amended and restated certificate of incorporation or our amended and restated bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) action asserting a claim governed by the internal affairs doctrine of the State of Delaware.
The expansion of our production capabilities requires investments of capital and we cannot guarantee that we will be able to obtain the capital necessary to support such expansion on favorable terms, or at all.
The expansion of our production capabilities requires significant capital investments, and we cannot guarantee that we will be able to obtain the capital necessary to support such expansion on favorable terms, or at all.
We could experience a higher rate of accidents or mishaps to the extent such deliveries are made by employees using modes of transport that are not owned or maintained by the Company.
We could experience a higher rate of accidents or mishaps to the extent such deliveries are made by employees using modes of transport that are not owned or maintained by our company.
This may require us to incur higher costs to procure these materials, equipment, and supplies from alternative sources, or cause a delay in the opening of a new restaurant. 21 Table of Contents If we encounter supply shortages, delays, or interruptions, are unable to identify alternative sources at a reasonable cost, or at all, or otherwise incur higher costs, our business, financial condition, and results of operations could be adversely affected.
This may require us to incur higher costs to procure these materials, equipment, and supplies from alternative sources, or cause a delay in the opening of a new restaurant. 22 Table of Contents If we encounter supply shortages, delays, or interruptions, are unable to identify alternative sources at a reasonable cost, or at all, or otherwise incur higher costs, our business, financial condition, and results of operations could be adversely affected.
We may incur substantial indebtedness under our Credit Facility or other debt instruments in the future, and, if we do so, the risks related to our level of indebtedness could increase.
We may incur substantial indebtedness under our 2022 Credit Facility or other debt instruments in the future, and, if we do so, the risks related to our level of indebtedness could increase.
In addition, the Credit Facility contains, and agreements governing future indebtedness may contain, restrictive covenants that limits our ability to engage in activities that may be in our long-term best interests.
In addition, the 2022 Credit Facility contains, and agreements governing future indebtedness may contain, restrictive covenants that limits our ability to engage in activities that may be in our long-term best interests.
From time to time, legislative proposals are made to increase the minimum wage at the U.S. federal, state, and local level, such as California Assembly Bill No. 1228, which was signed into law in September 2023 and which increases the state’s minimum wage and creates a council to set minimum wages and recommend regulations to address working conditions and other matters in the broadly defined fast food industry.
From time to time, legislative proposals are made to increase the minimum wage at the U.S. federal, state, and local levels, such as California Assembly Bill No. 1228, which was signed into law in September 2023 and which increases the state’s minimum wage and creates a Fast Food Council to set minimum wages and recommend regulations to address working conditions and other matters in the broadly defined fast food industry.
Our amended and restated certificate of incorporation authorizes our Board of Directors, without the approval of our stockholders, to issue 250.0 million shares of our preferred stock, subject to limitations prescribed by applicable law, rules and regulations and the provisions of our amended and restated certificate of incorporation, as shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series and to fix the designation, powers, preferences and rights of the shares of each such series, and the qualifications, limitations, or restrictions thereof.
Our amended and restated certificate of incorporation authorizes our Board of Directors, without the approval of our stockholders, to issue up to 250 million shares of our preferred stock, subject to limitations prescribed by applicable law, rules and regulations and the provisions of our amended and restated certificate of incorporation, as shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series and to fix the designation, powers, preferences and rights of the shares of each such series, and the qualifications, limitations, or restrictions thereof.
Our success is dependent, in part, upon our ability to respond effectively to changes in guests’ eating habits and government regulations and to adapt our menu offerings to trends in eating habits.
Our success is dependent, in part, upon our ability to respond effectively to changes in guests’ eating habits and preferences and government regulations and to adapt our menu offerings to trends in eating habits and preferences.
In addition, a substantial delay in bringing any new facility, including our new production facility in Virginia, up to full production on our projected schedule would put pressure on the rest of our business operations to meet demand and production schedules and may hinder our ability to produce all the food needed to meet guest and consumer demand and/or to achieve our expected financial performance.
In addition, a substantial delay in bringing any new facility up to full production on our projected schedule would put pressure on the rest of our business operations to meet demand and production schedules and may hinder our ability to produce all the food needed to meet guest and consumer demand and/or to achieve our expected financial performance.
Item 1A. Risk Factors You should carefully consider the following risk factors as well as the other information set forth in this Annual Report on Form 10-K (this “Annual Report”), including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes thereto.
Item 1A. Risk Factors You should carefully consider the following risk factors as well as the other information set forth in this Annual Report on Form 10-K (this “Annual Report”), including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes thereto.
Conversely, if we deem the lease termination and relocation expenses to be too high, we may decide to keep an underperforming restaurant open, or sublease it, which may hurt our overall profitability and results of operations. We currently sublease certain properties and face future liability if subtenants default or incur contingent liabilities.
Conversely, if we deem the lease termination and relocation expenses to be too high, we may decide to keep an underperforming restaurant open, or sublease the location, which may hurt our overall profitability and results of operations. We currently sublease certain properties and face future liability if subtenants default or incur contingent liabilities.
Any cost increases could have an adverse effect on our profitability, business, financial condition, and results of operations. 22 Table of Contents Risks Related to People and Culture We may face increases in labor costs, labor shortages, and difficulties in identifying, hiring, training, motivating, and retaining the right Team Members.
Any cost increases could have an adverse effect on our profitability, business, financial condition, and results of operations. 23 Table of Contents Risks Related to Our People and Culture We may face increases in labor costs, labor shortages, and difficulties in identifying, hiring, training, motivating, and retaining the right Team Members.
However, these platforms can facilitate rapid dissemination of negative publicity, such as negative guest or Team Member experiences. Adverse publicity, regardless of its accuracy, concerning our restaurants and our brand, may be shared on such platforms at any time and have the potential to quickly reach a wide audience.
These platforms can also facilitate rapid dissemination of negative publicity, such as negative guest or Team Member experiences. Adverse publicity, regardless of its accuracy, concerning our restaurants and our brand may be shared on such platforms at any time and have the potential to quickly reach a wide audience.
See Note 12 (Commitments and Contingencies) included in Part II, Item 8. “Financial Statements and Supplementary Data.” A judgment or other liability in excess of our insurance coverage for any claims or any adverse publicity resulting from claims could adversely affect our business, financial condition, and results of operations.
See Note 9 (Commitments and Contingencies) included in Part II, Item 8. “Financial Statements and Supplementary Data.” A judgment or other liability in excess of our insurance coverage for any claims or any adverse publicity resulting from claims could adversely affect our business, financial condition, and results of operations.
Furthermore, the opening of a new facility requires the efforts and attention of our management and other personnel, which has and will continue to divert resources from our existing business operations. We will also need to hire and retain more skilled Team Members to operate any new facility, including the facility in Virginia.
Furthermore, the opening of a new facility requires the efforts and attention of our management and other personnel, which has and will continue to divert resources from our existing business operations. We will also need to hire and retain more skilled Team Members to operate any new facility, including the recently opened facility in Virginia.
Significant theft, loss, or misappropriation of, or access to, guests’ or other proprietary data, or other breach of our or our business partners’ information technology systems, could result in fines, legal claims, or proceedings, including 25 Table of Contents regulatory investigations and actions, or liability for failure to comply with privacy and information security laws, which could disrupt our operations, damage our reputation, and expose us to claims from guests and Team Members, any of which could have a material adverse effect on our business, financial condition, and results of operations.
Significant theft, loss, or misappropriation of, or access to, guests’ or other proprietary data, or other breach of our or our business partners’ information technology systems, could result in fines, legal claims, or proceedings, including regulatory investigations and actions, or liability for failure to comply with privacy and information security laws, which could disrupt our operations, damage our reputation, and expose us to claims from guests and Team Members, any of which could have a material adverse effect on our business, financial condition, and results of operations.
Our testing, or the subsequent testing (if required) by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. Any material weaknesses could result in a material misstatement of our annual or quarterly financial statements or disclosures that may not be prevented or detected.
Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. Any material weaknesses could result in a material misstatement of our annual or quarterly financial statements or disclosures that may not be prevented or detected.
Our revenue growth may slow or our revenue may decline for a number of other reasons, including reduced demand for our food, increased competition, or if we cannot capitalize on growth opportunities. If our revenue does not grow at a greater rate than our operating expenses, we will not be able to achieve profitability.
Our revenue growth may slow or our revenue may decline for a number of other reasons, including reduced demand for our food, increased competition, or if we cannot capitalize on growth opportunities. If our revenue does not grow at a greater rate than our operating expenses, we will not be able to maintain profitability.
However, if we are unable to fully implement our disaster recovery plans, we may experience delays in recovery of data, inability to perform vital corporate functions, tardiness in required reporting and compliance, failures to adequately support field operations, and other breakdowns in normal communication and operating procedures that could have a material adverse effect on our financial condition, results of operation, and exposure to administrative and other legal claims.
However, if we are unable to fully implement our disaster recovery plans, we may experience delays in recovery of data, inability to perform vital corporate 33 Table of Contents functions, tardiness in required reporting and compliance, failures to adequately support field operations, and other breakdowns in normal communication and operating procedures that could have a material adverse effect on our financial condition, results of operation, and exposure to administrative and other legal claims.
We may not be able to successfully identify appropriate locations and develop and expand our operations in existing and new markets. Our ability to successfully execute on our growth strategy requires us to identify target markets where we can gain a foothold or expand our existing footprint on a profitable basis.
We may not be able to successfully identify appropriate locations and develop and expand our operations in existing and new markets. Our ability to successfully execute on our growth strategy requires us to identify target markets in which we can gain a foothold or expand our existing footprint on a profitable basis.
In addition, the health and environmental risks of organic fluorine and per- and polyfluoroalkyl substances (“PFAS”) have been the subject of increased regulatory scrutiny and litigation involving us and others in the restaurant industry. See Note 12 (Commitments and Contingencies) included in Part II, Item 8.
In addition, the health and environmental risks of organic fluorine and per- and polyfluoroalkyl substances (“PFAS”) have been the subject of increased regulatory scrutiny and litigation involving us and others in the restaurant industry. See Note 9 (Commitments and Contingencies) included in Part II, Item 8.
From time to time we may consider opportunities to acquire or make investments in new or complementary businesses, facilities, technologies, or products, or enter into strategic initiatives, that may enhance our capabilities, expand our manufacturing network, complement our current offerings, or expand the breadth of our markets.
From time to time we may consider opportunities to acquire or make investments in new or complementary businesses, facilities, technologies, or products, or enter into strategic initiatives, which may enhance our capabilities, expand our manufacturing network, complement our current offerings, or expand the breadth of our markets.
The market for qualified talent is competitive and we must provide increasingly attractive wages, benefits, and workplace conditions to retain qualified Team Members, particularly with respect to restaurant managerial positions where the pool of qualified candidates can be small.
The market for qualified talent is competitive and we must provide increasingly attractive wages, benefits, and workplace conditions to retain qualified Team Members, particularly with respect to restaurant managerial positions for which the pool of qualified candidates can be small.
For those locations where we are able to secure an attractive restaurant location, our progress in developing and subsequently opening new restaurants may be slower than desired, resulting in increased costs and lower than expected sales.
For those locations in which we are able to secure an attractive restaurant location, our progress in developing and subsequently opening new restaurants may be slower than desired, resulting in increased costs and lower than expected sales.
If one or more of these analysts ceases coverage of the Company or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline. 37 Table of Contents Anti-takeover provisions in our organizational documents and under Delaware law could delay or prevent a change of control.
If one or more of these analysts ceases coverage of the Company or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline. Anti-takeover provisions in our organizational documents and under Delaware law could delay or prevent a change of control.
See “—Our inability or failure to utilize, recognize, respond to, and effectively manage the immediacy of social media could have a material adverse effect on our business.” The risks associated with such negative publicity cannot be completely mitigated and may result in damage to our brand. Our efforts to market our restaurants and brand may not be successful.
See “—Our inability or failure to utilize, recognize, respond to, and effectively manage the immediacy of social media could have a material adverse effect on our business.” The risks associated with such negative publicity cannot be completely mitigated and may result in damage to our brand. 15 Table of Contents Our efforts to market our restaurants and brand may not be successful.
Furthermore, the third-party food delivery service industry has been consolidating and may continue to consolidate, which may give third-party delivery companies more leverage in negotiating the terms and pricing of contracts, which in turn could negatively affect our profitability. 17 Table of Contents In addition, from time to time, our employees make deliveries to guests who have placed catering and delivery orders.
Furthermore, the third-party food delivery service industry has been consolidating and may continue to consolidate, which may give third-party delivery companies more leverage in negotiating the terms and pricing of contracts, which in turn could negatively affect our profitability. In addition, from time to time, our employees make deliveries to guests who have placed catering and delivery orders.
Finally, as we expand our proprietary delivery services for services such as catering and native delivery, we expect to face competition from third-party delivery marketplaces who may have greater financial resources to spend on marketing and advertising.
Finally, as we expand our proprietary delivery services for services such as catering and native delivery, we expect to face competition from third-party delivery marketplaces that may have greater financial resources to spend on marketing and advertising.
If we do not have sufficient production capacity or experience a problem with our production facilities, our restaurants may experience delays or stoppages in receiving certain of our food items and our ability to meet guest and consumer 20 Table of Contents demand could be impacted, which could in turn adversely affect our brand, business, financial condition, and results of operations.
If we do not have sufficient production capacity or experience a problem with our production facilities, our restaurants may experience delays or stoppages in receiving certain of our food items and our ability to meet guest and consumer demand could be impacted, which could in turn adversely affect our brand, business, financial condition, and results of operations.
In some instances, we may not be able to identify the cause of performance problems within an acceptable period of time, and, in cases where we rely on third-party information technology infrastructure, we may not have sufficient contractual recourse against such third parties to make us whole for losses resulting from the failure of such infrastructure.
In some instances, we may not be able to identify the cause of performance problems within an acceptable period of time, and, in cases where we rely on third-party information technology infrastructure, we may not have sufficient contractual recourse against such third parties to make us whole for losses 28 Table of Contents resulting from the failure of such infrastructure.
Therefore, sales volume in our restaurants could decline if guests choose to reduce the amount they spend on meals, choose to dine out less frequently, or reduce the amount they spend on meals while dining out. The demand for our CPG offerings could also decline.
Therefore, sales volumes in our restaurants could decline if guests choose to reduce the amount they spend on meals, choose to dine out less frequently, or reduce the amount they spend on meals while dining out. The demand for our CPG offerings could also decline.
Although we believe we have made appropriate provisions for taxes in the jurisdictions in which we operate, changes in the tax laws, or challenges from tax authorities under existing tax laws could adversely affect our business, financial condition, and results of operations. Our ability to use our net operating loss carryforwards may be limited.
Although we believe we have made appropriate provisions for taxes in the jurisdictions in which we operate, changes in the tax laws, or challenges from tax authorities under existing tax laws could adversely affect our business, financial condition, and results of operations. 31 Table of Contents Our ability to use our net operating loss carryforwards may be limited.
Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation, except our stockholders will not be deemed to have waived (and cannot waive) compliance with the federal securities laws and the rules and regulations thereunder.
Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation, except our 39 Table of Contents stockholders will not be deemed to have waived (and cannot waive) compliance with the federal securities laws and the rules and regulations thereunder.
The risk of these claims may increase, and the cost to the Company to insure against such perils may rise or become more difficult to obtain, as the number of catering and delivery orders we fulfill increases.
The risk of these claims may increase, and the cost to us to insure against such perils may rise or become more difficult to obtain, as the number of catering and delivery orders we fulfill increases.
The CAVA app and online ordering system could be interrupted by technological failures or user errors, or be subject to cyber-attacks, which could adversely impact our sales and brand image. Substantially all of our delivery orders, including native delivery orders, are fulfilled through our third-party delivery partners.
The CAVA app and online ordering system could be interrupted by technological failures or user errors, or be subject to cyber-attacks, which could adversely impact our sales and brand image. 18 Table of Contents Substantially all of our delivery orders, including native delivery orders, are fulfilled through our third-party delivery partners.
These laws and regulations also could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits 35 Table of Contents and coverage or incur substantially higher costs to obtain the same or similar coverage.
These laws and regulations also could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.
Any new restaurants that we open may not be profitable or achieve operating results similar to those of our existing restaurants on a similar time frame or at all, our historical pre-opening costs may not be indicative of future pre-opening costs and increases in CAVA AUV that we have experienced in the past may not be indicative of future results.
Any new restaurants that we open may not be profitable or achieve operating results similar to those of our existing restaurants on a similar timeframe or at all, our historical pre-opening costs may not be indicative of future pre-opening costs and increases in CAVA AUV that we have experienced in the past may not be indicative of future results.
Current macroeconomic conditions and events, such as inflation, high interest rates, and recent turmoil in the banking industry, may increase the risk of a recession. Guests’ preferences tend to shift to lower-cost alternatives during recessionary periods and other periods in which disposable income is adversely affected.
Current macroeconomic conditions and events, such as inflation, high interest rates, and uncertainty in the banking industry, may increase the risk of a recession. Guests’ preferences tend to shift to lower-cost alternatives during recessionary periods and other periods in which disposable income is adversely affected.
As a result of these covenants and restrictions, we and our subsidiaries are, and will be, limited in how we conduct our business, and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. See Part II, Item 7.
As a result of these covenants and restrictions, we and our subsidiaries are, and will be, limited in 35 Table of Contents how we conduct our business, and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. See Part II, Item 7.
We may not be able to successfully expand our digital and delivery business, which is subject to risks outside of our control. For fiscal 2023, 2022, and 2021, CAVA Digital Revenue Mix was 36.0%, 34.5%, and 37.4%, respectively. The expansion of our digital and delivery business is important to the growth of our business.
We may not be able to successfully expand our digital and delivery business, which is subject to risks outside of our control. For fiscal 2024, 2023, and 2022, CAVA Digital Revenue Mix was 36.4%, 36.0%, and 34.5%, respectively. The expansion of our digital and delivery business is important to the growth of our business.
If our marketing initiatives are unsuccessful or ineffective and do not meet our performance targets, such as the introduction of new menu offerings that do not generate the level of sales that we expect, our business, financial condition, and results of operations may be adversely affected.
If our marketing initiatives are unsuccessful or ineffective and do not enable us to meet our performance targets, such as the introduction of new menu offerings that do not generate the level of sales that we expect, our business, financial condition, and results of operations may be adversely affected.
In addition, we have no control over the costs of the services provided 27 Table of Contents by national telecommunications operators. If mobile internet access fees or other charges to internet users increase, our digital orders may decrease, which may in turn cause our revenue to significantly decrease.
In addition, we have no control over the costs of the services provided by national telecommunications operators. If mobile internet access fees or other charges to internet users increase, our digital orders may decrease, which may in turn cause our revenue to significantly decrease.
If we are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements, and harm our results of operations.
If we are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause us 36 Table of Contents to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements, and harm our results of operations.
If either we are unable to conclude that we have effective internal control over financial reporting or our independent registered public accounting firm is unable to provide us with an unqualified report (to the extent it is required to issue a report), investors could lose confidence in our reported financial information, which could have a material adverse effect on the trading price of our common stock.
If either we are unable to conclude that we have effective internal control over financial reporting or our independent registered public accounting firm is unable to provide us with an unqualified report, investors could lose confidence in our reported financial information, which could have a material adverse effect on the trading price of our common stock.
Issuances of common stock or voting preferred stock would reduce your influence over matters on which our stockholders vote, and, in the case of issuances of preferred stock, would likely result in your interest in us being subject to the prior rights of holders of that preferred stock, if any.
Issuances of common stock or voting preferred stock would reduce your influence over matters on which our 37 Table of Contents stockholders vote, and, in the case of issuances of preferred stock, would likely result in your interest in us being subject to the prior rights of holders of that preferred stock, if any.
If any guest becomes, or is under the belief that they have become, ill due to a food safety issue, we may temporarily close some restaurants, which would adversely impact our results of operations. Food safety issues may be caused by a variety of factors, many of which are out of our control.
If any guest becomes, or is under the belief that they have become, ill due to a food safety issue, we may temporarily close some restaurants or be impacted by associated negative publicity, which would adversely impact our results of operations. Food safety issues may be caused by a variety of factors, many of which are out of our control.
If we cannot license or develop replacements for any allegedly infringing 26 Table of Contents aspect of our business, we could be forced to limit our service and may be unable to compete effectively. Any of these results could adversely affect our business, financial condition, and results of operations.
If we cannot license or develop replacements for any allegedly infringing aspect of our business, we could be forced to limit our service and may be unable to compete effectively. Any of these results could adversely affect our business, financial condition, and results of operations.
If our ESG-related data, processes and reporting are incomplete or inaccurate, or if we fail to achieve progress with respect to our, and our industry’s, ESG-related aspirational goals, it could lead to private, regulatory, or administrative challenges or proceedings, including with respect to our disclosure controls and procedures, as well as adverse publicity, any of which could damage our reputation and our business.
If our ESG-related data, processes and reporting are incomplete or inaccurate, or if we fail to achieve progress with respect to our, and our industry’s, ESG-related aspirational goals, it could lead to private, regulatory, or administrative challenges or proceedings, including with respect to our disclosure controls and procedures, as well as adverse publicity, any of which could damage our reputation and our business, financial condition, and results of operations.
Even if the allegations against us in current or future legal matters are unfounded or we ultimately are not held liable, the costs to defend ourselves may be significant and may cause a diversion of management’s attention and resources, and a negative impact on our business, financial condition, and results of operations.
Even if the allegations against us in current or future legal matters are unfounded or we ultimately are not held liable, the costs to defend ourselves may be significant and may cause a diversion of management’s attention and resources, resulting in an adverse impact on our business, financial condition, and results of operations.
See “— Our reliance on third parties could have an adverse effect on our business, financial condition, and results of operations. ” We cannot guarantee that any cost increases can be offset by increased prices, that increases in prices will be fully absorbed by our guests without any resulting change to their demand for our food, or that we will generate sales growth in an amount sufficient to offset inflationary and other cost pressures, particularly with elevated inflation and increases in interest rates in fiscal 2023.
See “— Our reliance on third parties could have an adverse effect on our business, financial condition, and results of operations. ” We cannot guarantee that any cost increases can be offset by increased prices, that increases in prices will be fully absorbed by our guests without any resulting change to their demand for our food, or that we will generate sales growth in an amount sufficient to offset inflationary and other cost pressures, particularly with inflation and increases in interest rates that have recently been experienced.
For example, delays in construction and increased construction costs, including as a result of the effects of COVID-19 pandemic and macroeconomic factors, as well as delays in inspections, the receipt of necessary permits, and equipment availability, have caused, and are continuing to cause, a delay in opening restaurants, resulting in increased costs and lower than anticipated sales.
For example, delays in construction and increased construction costs, including as a result of macroeconomic factors, as well as delays in inspections, the receipt of necessary permits, and equipment availability, have caused, and are continuing to cause, a delay in opening restaurants, resulting in increased costs and lower than anticipated sales.
As part of that strategy, we sometimes enter into geographic markets in which we have little or no prior operating experience. For example, we recently expanded into the Midwest and are continuing to expand further where we historically have not had a presence and have no restaurant operating experience.
As part of that strategy, we sometimes enter into geographic markets in which we have little or no prior operating experience. For example, we expanded into the Midwest in 2024 and are continuing to expand further into places in which we historically have not had a presence and have no restaurant operating experience.
We have and may be forced to temporarily close restaurants, or reduce restaurant hours or CPG production, as a result of labor shortages, which could result in reduced revenue.
We have been and in the future may be forced to temporarily close restaurants, or reduce restaurant hours or CPG production, as a result of labor shortages, which could result in reduced revenue.
For example, in October 2023, California enacted climate disclosure laws that will require us to report on climate-related financial risks and other climate-related matters. In addition, there is an increasing public focus by regulators, guests, investors, and other stakeholders on ESG matters.
For example, in October 2023, California enacted climate disclosure laws that will require us to report on climate-related financial risks and other climate-related matters. In 32 Table of Contents addition, there is an increasing public focus by regulators, guests, investors, and other stakeholders on ESG matters.
These efforts could be expensive and time-consuming and may disrupt our ongoing business and prevent management from focusing on our operations. 19 Table of Contents We may not be able to manage our manufacturing and supply chain effectively, which may adversely affect our results of operations.
These efforts could be expensive and time-consuming and may disrupt our ongoing business and prevent management from focusing on our operations. 20 Table of Contents Risks Related to Our Manufacturing and Supply Chain We may not be able to manage our manufacturing and supply chain effectively, which may adversely affect our results of operations.
Occupational Safety and Health Act, which governs worker health and safety, as well as rules and regulations regarding the COVID-19 pandemic; and • the FAST Act, which proposes to create a council to set, among other things, minimum wages and working condition standards in the broadly defined fast food industry.
Occupational Safety and Health Act, which governs worker health and safety, as well as rules and regulations regarding the COVID-19 pandemic; and • California’s FAST Act, which created a Fast Food Council to set, among other things, minimum wages and working condition standards in the broadly defined fast food industry.
In particular, we purchase substantial quantities of chicken, which is subject to significant price fluctuations due to conditions affecting weather, feed and chicken prices, industry demand, and other factors.
In particular, we purchase substantial quantities of chicken, which is subject to significant price fluctuations due to conditions such as weather, feed and chicken prices, industry demand, and other factors.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have also implemented an incident response process that is overseen by our Senior Director of Cybersecurity and supported by a multi-level incident response process led by our cybersecurity team. This is a documented framework that addresses our processes to assess, identify and manage material risks from cybersecurity threats and incidents, which are prioritized for response and remediation efforts.
Biggest changeThis is a documented framework that addresses our processes to assess, identify, and manage material risks from cybersecurity threats and incidents, which are prioritized for response and remediation efforts. Our incident response process includes analysis of the impact of a cybersecurity threat or incident for materiality to ensure proper reporting.
As part of our overall enterprise risk management process, we have established our management-level Risk Committee, composed of our Chief Information Officer, Chief Legal Officer and Chief Financial Officer, among others, which assesses overall risks to the Company based on input from our other business leaders.
As part of our overall enterprise risk management process, we have established our management-level Risk Committee, composed of our Chief Information Officer, Chief Information Security Officer, Chief Legal Officer and Chief Financial Officer, among others, which assesses overall risks to the Company based on input from our other business leaders.
Accordingly, while we continue to make significant investment in physical and technological security measures, including third-party services designed to anticipate cyber-attacks and prevent breaches, we cannot provide assurance that we will be successful in adequately responding to, or preventing, cyber-attacks. We also maintain cybersecurity insurance that is regularly reviewed to assess whether there is appropriate coverage.
Accordingly, while we continue to make significant investment in physical and technological security measures, including third-party services designed to help us anticipate cyber-attacks and prevent breaches, we cannot provide assurance that we will be successful in adequately responding to, or preventing, cyber-attacks. We also maintain cybersecurity insurance that is regularly reviewed to assess whether there is appropriate coverage.
Item 1C. Cybersecurity Risk Management and Strategy We have developed a cybersecurity program that continuously evaluates material risks to our business and applies controls in an attempt to eliminate or mitigate them. Our key cybersecurity risks include, among others: brand and reputational damage, business disruption, regulatory and compliance risk, sensitive data loss, and reliance on third parties.
Item 1C. Cybersecurity Risk Management and Strategy We have developed a cybersecurity program that continuously evaluates material risks to our business and applies controls in an attempt to help avoid or mitigate them. Our key cybersecurity risks include, among others: brand and reputational damage, business disruption, regulatory and compliance risk, sensitive data loss, and reliance on third parties.
The Audit Committee regularly reports to the full Board of Directors regarding its activities, including those related to cybersecurity. Role of Management We have established a management-level Risk Committee, that is led by the Chief Legal Officer, and also includes the Chief Information Officer and Chief Financial Officer, as well as certain of their respective Team Members.
The Audit Committee regularly reports to the full Board of Directors regarding its activities, including those related to cybersecurity. 41 Table of Contents Role of Management We have established a management-level Risk Committee, that is led by the Chief Legal Officer, and also includes the Chief Information Officer and Chief Financial Officer, as well as certain of their respective Team Members.
We are members of the Retail and Hospitality Information Sharing and Analysis Center, with more than 250 member companies from the retail, hospitality, and travel industries, which enables us to benchmark our cybersecurity risks, identify and adopt best practices for our cybersecurity program, subscribe to threat intelligence alerts, and contribute to the collective defense of our industries.
We are members of the Retail and Hospitality Information Sharing and Analysis Center, with more than 250 member companies from the retail, hospitality, and travel industries, which enables us to benchmark our cybersecurity risks, identify and adopt industry-standard practices for our cybersecurity program, subscribe to threat intelligence alerts, and contribute to the collective defense of our industries.
In addition, our cybersecurity team, led by the Chief Information Officer, works cross functionally with our legal and other business functions to provide cybersecurity training and, as appropriate, manage cybersecurity risks and incidents. Our Chief Information Officer and our Senior Director of Cybersecurity each have more than two decades of experience in technology and cybersecurity.
In addition, our cybersecurity team, led by the Chief Information Officer, works cross functionally with our legal and other business functions to provide cybersecurity training and, as appropriate, manage cybersecurity risks and incidents. Our Chief Information Officer and our Chief Information Security Officer each have more than two decades of experience in technology and cybersecurity.
The Audit Committee receives regular reports on at least a quarterly basis from our cybersecurity team, led by our Chief Information Officer, typically on, among other things, our cybersecurity posture, cybersecurity benchmarking, potential cybersecurity vulnerabilities, and other cybersecurity interest items such as the external cybersecurity environment, items requiring Audit Committee input, and our broader cybersecurity program roadmap, in order to monitor the prevention, detection, mitigation and remediation of cybersecurity threats and incidents.
The Audit Committee receives regular reports on at least a quarterly basis from our cybersecurity team, typically on, among other things, our cybersecurity posture, cybersecurity benchmarking, potential cybersecurity vulnerabilities, and other cybersecurity interest items such as the external cybersecurity environment, items requiring Audit Committee input, and our broader cybersecurity program roadmap, in order to monitor the prevention, detection, mitigation and remediation of cybersecurity threats and incidents.
The Risk Committee meets on at least a quarterly basis to review enterprise risks, including with respect to cybersecurity, as applicable. Enterprise risks, including cybersecurity risk, are briefed to the Audit Committee on at least a quarterly basis by our Chief Legal Officer in coordination with the Senior Director of Cybersecurity and Chief Financial Officer, or through general updates.
The Risk Committee meets on at least a quarterly basis to review enterprise risks, including with respect to cybersecurity, as applicable. Enterprise risks, including cybersecurity risk, are briefed to the Audit Committee on at least a quarterly basis by our Chief Legal Officer in coordination with the Chief Information Officer and Chief Financial Officer, or through general updates.
While we are subject to continuous cybersecurity threats and attacks like most companies, we are not aware of any cybersecurity incidents that have materially affected or are reasonably likely to materially affect us, including our business 39 Table of Contents strategy, results of operations, or financial condition. However, as discussed more fully under Item 1A.
While we are subject to continuous cybersecurity threats and attacks like most companies, we are not aware of any current or past cybersecurity incidents that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition. However, as discussed more fully under Item 1A.
We engage third parties and auditors to assess our cybersecurity program, including the use of select penetration testing and threat intelligence services, and to assist us in adopting and implementing best practices to improve our cybersecurity program.
Our incident response process is continually enhanced and validated through tabletop exercises and engagements with third-party partners. We engage third parties and auditors to assess our cybersecurity program, including the use of select penetration testing and threat intelligence services, and to assist us in adopting and implementing industry-standard practices to improve our cybersecurity program.
Removed
Our incident response process includes analysis of the impact of a cybersecurity threat or incident for materiality to ensure proper reporting. Our incident response process is continually enhanced and validated through tabletop exercises and engagements with third-party partners.
Added
We have also implemented an incident response process that is overseen by our Chief Information Security Officer, who reports to the Chief Information Officer and is supported by a multi-level incident response process led by our cybersecurity team.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe support centers in Brooklyn, New York, and Plano, Texas, focus primarily on creative content and restaurant and general support functions, respectively. We do not currently own any real estate, other than our production facility in Verona, Virginia, which recently commenced operations in February 2024, and we lease all of our restaurant locations.
Biggest changeIn addition, we lease property for our two support centers, which are located in Brooklyn, New York and Plano, Texas; our production facility in Laurel, Maryland; and our food distribution center in Edison, New Jersey. The support centers in Brooklyn, New York and Plano, Texas focus primarily on creative content and restaurant and general support functions, respectively.
Item 2. Properties Our collaboration center is located in Washington, D.C., where we currently lease approximately 21,000 square feet pursuant to a lease agreement that expires in 2035. In addition, we have two support centers in Brooklyn, New York and Plano, Texas, and a production facility in Laurel, Maryland, all of which are leased.
Item 2. Properties Our restaurant collaboration center is located in Washington, D.C., where we currently lease approximately 21,000 square feet pursuant to a lease agreement that expires in 2035.
We believe our facilities are adequate and suitable for our current needs, and that suitable additional or alternative space will be available to accommodate our operations when needed.
We do not currently own any real estate, other than our production facility in Verona, Virginia, which commenced operations in February 2024, and we lease all of our restaurant locations. We believe our facilities are adequate and suitable for our current needs, and that suitable additional or alternative space will be available to accommodate our operations when needed.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings For information regarding legal proceedings, see Note 12 (Commitments and Contingencies) in our consolidated financial statements included in Part II, Item 8. “Financial Statements and Supplementary Data.” Item 4. Mine Safety Disclosures Not applicable. 40 Table of Contents Part II
Biggest changeItem 3. Legal Proceedings For information regarding legal proceedings, see Note 9 (Commitments and Contingencies) in our consolidated financial statements included in Part II, Item 8. “Financial Statements and Supplementary Data.” Item 4. Mine Safety Disclosures Not applicable. 42 Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod Total Number of Shares Purchased 1 Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 2, 2023 to October 29, 2023 9,829 $ 31.15 — — October 30, 2023 to November 26, 2023 35,723 34.46 — — November 27, 2023 to December 31, 2023 — — — — Total 45,552 $ 33.74 — — __________________ (1) Purchases made to satisfy the income tax minimum withholding obligations of certain employees upon the vesting of restricted stock units issued under the Company's 2015 Equity Incentive Plan.
Biggest changePurchases of Equity Securities by Issuer During the twelve weeks ended December 29, 2024, we made the following purchases of our equity securities that are registered pursuant to Section 12(b) of the Securities Exchange Act of 1934: Period Total Number of Shares Purchased 1 Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 7, 2024 to November 3, 2024 13,652 $ 136.05 — — November 4, 2024 to December 1, 2024 35,058 141.38 — — December 2, 2024 to December 29, 2024 — — — — Total 48,710 $ 139.89 — — __________________ 1 Purchases made to satisfy the income tax minimum withholding obligations of certain employees upon the vesting of restricted stock units (“RSUs”) issued under the Company’s 2015 Equity Incentive Plan and 2023 Equity Incentive Plan.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the New York Stock Exchange under the symbol “CAVA.” As of February 19, 2024, there were approximately 52 shareholders of record. This does not include persons whose stock is held in nominee or “street name” accounts through brokers.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the New York Stock Exchange under the symbol “CAVA.” As of February 18, 2025, there were approximately 34 stockholders of record. This does not include persons whose stock is held in nominee or “street name” accounts through brokers.
Data for the S&P 500 Index and the S&P 500 Restaurant Index assumes reinvestment of dividends. As noted above, no dividends have been declared on our common stock to date.
Prior to that time, there was no public market for our common stock. Data for the S&P 500 Index and the S&P 500 Restaurant Index assumes reinvestment of dividends. As noted above, no dividends have been declared on our common stock to date.
Fiscal year ended December 31, 2023 Source Data: Research Data Group Inc. The performance graph and related information shall not be deemed “soliciting material”, is not deemed “filed” with the SEC, and is not to be incorporated by reference into any future filing under the Securities Act or Exchange Act. Item 6. Reserved 42 Table of Contents
Source Data: Research Data Group Inc. The performance graph and related information shall not be deemed “soliciting material,” is not deemed “filed” with the SEC, and is not to be incorporated by reference into any future filing under the Securities Act or Exchange Act. Item 6. Reserved 44 Table of Contents
Dividend Policy We did not pay any cash dividends in fiscal 2023 and do not intend to declare or pay any cash dividends on our common stock for the foreseeable future. We currently intend to continue to retain earnings for the operation and expansion of our business and for working capital needs.
Dividend Policy No dividends have been declared or paid on our shares of common stock to date, and we do not intend to declare or pay any cash dividends on our common stock for the foreseeable future. We currently intend to continue to retain earnings for the operation and expansion of our business and for working capital needs.
The comparisons in the graph below are based on historical data and are not indicative of, nor intended to forecast, future performance of our common stock. 41 Table of Contents June 15, 2023 June 30, 2023 July 31, 2023 August 31, 2023 September 30, 2023 October 31, 2023 November 30, 2023 December 31, 2023 CAVA $ 100.00 $ 91.26 $ 127.28 $ 98.97 $ 68.26 $ 70.40 $ 75.80 $ 95.79 S&P 500 100.00 106.61 110.03 108.28 103.12 100.94 110.17 115.17 S&P Restaurant 500 100.00 104.45 103.65 99.81 93.99 94.25 102.49 105.32 __________________ *$100 invested on June 15, 2023 in CAVA Group, Inc. stock or May 31, 2023 in indices, including reinvestment of dividends.
The comparisons in the graph below are based on historical data and are not indicative of, nor intended to forecast, future performance of our common stock. 43 Table of Contents June 15, 2023 July 9, 2023 October 1, 2023 December 31, 2023 April 21, 2024 July 14, 2024 October 6, 2024 December 29, 2024 CAVA $ 100.00 $ 88.30 $ 68.26 $ 95.79 $ 132.98 $ 187.76 $ 282.15 $ 254.89 S&P 500 100.00 106.61 103.12 115.17 127.33 132.79 140.60 143.99 S&P Restaurant 500 100.00 104.45 93.99 105.32 107.38 100.54 113.16 110.62 __________________ *$100 invested on June 15, 2023 in CAVA Group, Inc. stock or May 31, 2023 in indices, including reinvestment of dividends.
Removed
Purchases of Equity Securities by Issuer During the thirteen weeks ended December 31, 2023, we made the following purchases of our equity securities that are registered pursuant to Section 12(b) of the Securities Exchange Act of 1934.
Added
These shares were not acquired pursuant to any repurchase plan or program. The average prices listed in the above table are averages of the fair market prices at which we valued shares withheld for purposes of calculating the number of shares to be withheld.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. Reserved 43 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 43 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 55 Item 8. F inancial Statements and Supplementary Data 57 I ndex to Consolidated Financial Statements 57 R eport of Independ ent Registered Public Accounting Firm 58
Biggest changeItem 6. Reserved 45 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 45 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 57 Item 8. Financial Statements and Supplementary Data 59 Index to Consolidated Financial Statements 59 Report of Independent Registered Public Accounting Firm 60

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

83 edited+16 added−23 removed38 unchanged
Biggest changeThe following table summarizes our segment results for the fiscal years indicated: (in thousands) 2023 2022 Revenue CAVA $ 717,060 $ 448,594 Zoes Kitchen 3,867 108,392 Other 7,773 7,133 Total revenue 728,700 564,119 Restaurant-level operating expenses 1 CAVA 539,572 357,501 Zoes Kitchen 4,044 102,292 Other 4,738 6,342 Total restaurant-level operating expenses 548,354 466,135 Restaurant-level profit (loss) CAVA 177,488 91,093 Zoes Kitchen (177) 6,100 Other 3,035 791 Total restaurant-level profit 180,346 97,984 Reconciliation of restaurant-level profit to income (loss) before income taxes: General and administrative expenses 101,491 70,037 Depreciation and amortization 47,433 42,724 Restructuring and other costs 6,080 5,923 Pre-opening costs 15,718 19,313 Impairment and asset disposal costs 4,899 19,753 Interest (income) expense, net (8,852) 47 Other income, net (471) (919) Income (loss) before income taxes $ 14,048 $ (58,894) __________________ 1 Restaurant-level operating expenses consist of food, beverage, and packaging (excluding depreciation and amortization), labor, occupancy, and other operating expenses. 47 Table of Contents Comparison of Fiscal 2023 and 2022 CAVA Segment Results The following table summarizes the results of the CAVA segment for the fiscal years indicated: 2023 2022 Change ($ in thousands) $ % of Revenue $ % of Revenue $ % Restaurant revenue $ 717,060 100.0 % $ 448,594 100.0 % $ 268,466 59.8 % Restaurant operating expenses (excluding depreciation and amortization): Food, beverage, and packaging 208,237 29.0 140,760 31.4 67,477 47.9 Labor 185,820 25.9 121,318 27.0 64,502 53.2 Occupancy 57,811 8.1 40,855 9.1 16,956 41.5 Other operating expenses 87,704 12.2 54,568 12.2 33,136 60.7 Total restaurant operating expenses 539,572 75.2 357,501 79.7 182,071 50.9 Restaurant-level profit $ 177,488 24.8 % $ 91,093 20.3 % $ 86,395 94.8 % CAVA Revenue The increase in CAVA Revenue was primarily due to a $177.4 million increase from the 145 Net New CAVA Restaurant Openings during or subsequent to fiscal 2022, of which the majority was attributable to the 91 CAVA restaurants that were converted from Zoes Kitchen locations.
Biggest changeComparison of Fiscal 2024 and 2023 CAVA Segment Results The following table summarizes the results of the CAVA segment for the fiscal years indicated: 2024 2023 Change ($ in thousands) $ % of Revenue $ % of Revenue $ % Restaurant revenue $ 954,273 100.0 % $ 717,060 100.0 % $ 237,213 33.1 % Restaurant operating expenses (excluding depreciation and amortization): Food, beverage, and packaging 279,741 29.3 208,237 29.0 71,504 34.3 Labor 247,490 25.9 185,820 25.9 61,670 33.2 Occupancy 69,851 7.3 57,811 8.1 12,040 20.8 Other operating expenses 119,078 12.5 87,704 12.2 31,374 35.8 Total restaurant operating expenses 716,160 75.0 539,572 75.2 176,588 32.7 Restaurant-level profit $ 238,113 25.0 % $ 177,488 24.8 % $ 60,625 34.2 % CAVA Revenue The increase in CAVA Revenue was primarily due to a $156.6 million increase from the 130 Net New CAVA Restaurant Openings during or subsequent to fiscal 2023, of which a portion was attributable to the 28 CAVA restaurants that were converted from Zoes Kitchen locations.
CAVA Restaurant-Level Profit and CAVA Restaurant-Level Profit Margin CAVA Restaurant-Level Profit represents CAVA Revenue in the specified period less food, beverage, and packaging, labor, occupancy, and other operating expenses, excluding depreciation and amortization, in the period. CAVA Restaurant-Level Profit excludes pre-opening costs. We use CAVA Restaurant-Level Profit as a segment measure of profit and loss.
CAVA Restaurant-Level Profit and CAVA Restaurant-Level Profit Margin CAVA Restaurant-Level Profit represents CAVA Revenue in the specified period less food, beverage, and packaging, labor, occupancy, and other operating expenses, excluding depreciation and amortization. CAVA Restaurant-Level Profit excludes pre-opening costs. We use CAVA Restaurant-Level Profit as a segment measure of profit and loss.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes included in Item 8. “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes thereto included in Item 8. “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
Adjusted EBITDA and Adjusted EBITDA Margin are not recognized terms under GAAP and should not be considered as alternatives to net income (loss) or net income (loss) margin as measures of financial performance, or cash provided by operating activities as measures of liquidity, or any other performance measure derived in accordance with GAAP.
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Net Income margin are not recognized terms under GAAP and should not be considered as alternatives to net income or net income margin as measures of financial performance, or cash provided by operating activities as measures of liquidity, or any other performance measure derived in accordance with GAAP.
We believe that these key financial measures provide useful information to users of our financial statements in understanding and evaluating our results of operations in the same manner as our management team.
We believe that these key performance measures provide useful information to users of our financial statements in understanding and evaluating our results of operations in the same manner as our management team.
The presentation of these key performance measures, including Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP financial measures, is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. See “Non-GAAP Financial Measures” below.
The presentation of these key performance measures, including Adjusted EBITDA Adjusted EBITDA margin, Adjusted Net Income and Adjusted Net Income margin which are non-GAAP financial measures, is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. See “Non-GAAP Financial Measures” below.
Our expected primary uses on a short- and long-term basis are for the expansion of our restaurant base and manufacturing capabilities, working capital, and other capital expenditures. Our rapid expansion has been significantly aided by the Zoes Kitchen acquisition, which enabled us to expand our CAVA restaurant base in a capital-efficient manner.
Our expected primary uses on a short- and long-term basis are for the expansion of our restaurant base, working capital, and other capital expenditures. Our rapid expansion has been significantly aided by the Zoes Kitchen acquisition, which enabled us to expand our CAVA restaurant base in a capital-efficient manner.
See “Non-GAAP Financial Measures” below for a reconciliation of Adjusted EBITDA to net income (loss). Components of Results of Operations Revenue includes sales of food and beverage in our CAVA and Zoes Kitchen locations and CPG sales. As of March 2, 2023, we no longer operate any Zoes Kitchen locations.
See “Non-GAAP Financial Measures” below for a reconciliation of Adjusted Net Income to net income. Components of Results of Operations Revenue includes sales of food and beverage in our CAVA and Zoes Kitchen locations and CPG sales. As of March 2, 2023, we no longer operate any Zoes Kitchen locations.
Results of Operation s Our results of operations, on a consolidated basis and by segment, for fiscal 2023 and 2022 are set forth below. We present our segment results before our consolidated results as we believe that our CAVA segment is more useful and meaningful in assessing the performance of our business, which is mainly driven by our CAVA segment.
Results of Operation s Our results of operations, on a consolidated basis and by segment, for fiscal 2024 and 2023 are set forth below. We present our segment results before our consolidated results as we believe that our CAVA segment is more useful and meaningful in assessing the performance of our business, which is mainly driven by our CAVA segment.
Management believes Adjusted EBITDA and Adjusted EBITDA Margin are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments.
Management believes Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Net Income margin are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate, and capital investments.
(together with its wholly owned subsidiaries, referred to as the “Company,” “CAVA,” “we,” “us,” and “our” unless specified otherwise) was formed as a Delaware corporation in 2015, and prior to that, the first CAVA restaurant opened in 2011 in Bethesda, Maryland.
(together with its wholly owned subsidiaries, referred to as the “Company,” “CAVA,” “we,” “us,” and “our,” unless specified otherwise) was formed as a Delaware corporation in 2015, and prior to that, the first CAVA restaurant opened in 2011 in Bethesda, Maryland.
Non-GAAP Financial Measures In addition to our consolidated financial statements, which are prepared in accordance with GAAP, we present Adjusted EBITDA and Adjusted EBITDA Margin as supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP.
Non-GAAP Financial Measures In addition to our consolidated financial statements, which are prepared in accordance with GAAP, we present Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Net Income margin as supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP.
We use CAVA AUV to assess and understand changes in guest spending patterns and the overall performance of operating restaurants opened for the entire period. CAVA AUV is impacted by changes in guest traffic, menu prices and product mix.
We use CAVA AUV to assess and understand changes in guest spending patterns and the overall performance of operating restaurants open for the entire period. CAVA AUV is impacted by changes in guest traffic, menu prices, and product mix.
Management uses Adjusted EBITDA and Adjusted EBITDA Margin to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions and to compare our performance against that of other peer companies using similar measures.
Management uses Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Net Income margin to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures.
We base our estimates on historical experience, known trends and events, as well as management’s judgment. Although management believes the judgment applied in preparing estimates is reasonable based on circumstances and information known at the time, actual results could vary materially from the estimates based on assumptions used in the preparation of our financial statements.
We base our estimates on historical experience, known trends and events, as well as management’s judgment. Although management believes the judgment applied in preparing estimates is reasonable 55 Table of Contents based on circumstances and information known at the time, actual results could vary materially from the estimates based on assumptions used in the preparation of our financial statements.
CAVA Restaurant-Level Profit and CAVA Restaurant-Level Profit Margin are not indicative of the overall results of the Company and do not accrue directly to the benefit of our shareholders, as corporate-level expenses are excluded from such measures.
CAVA Restaurant-Level Profit and CAVA Restaurant-Level Profit Margin are not indicative of the overall results of the Company and do not accrue directly to the benefit of our stockholders, as corporate-level expenses are excluded from such measures.
Our Adjusted EBITDA and Adjusted EBITDA Margin measures have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under GAAP.
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Net Income margin measures have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under GAAP.
The Company uses the Black-Scholes-Merton (“Black-Scholes”) option-pricing model to estimate the fair value of stock options at the grant date. The use of the Black-Scholes option-pricing model requires the use of subjective assumptions, including the expected term, risk-free interest rate, expected volatility, and expected dividend yield of the underlying common stock.
The Company uses the Black-Scholes-Merton (“Black-Scholes”) option-pricing model to estimate the fair value of stock options at the grant date. The use of the Black-Scholes option-pricing model requires the use of subjective 56 Table of Contents assumptions, including the expected term, risk-free interest rate, expected volatility, and expected dividend yield of the underlying common stock.
Interest (income) expense, net includes interest income from our short-term investments, partially offset by cash and non-cash charges related to our 2022 Credit Facility, including the amortization of debt issuance costs. Provision for income taxes represent federal and state current and deferred income tax expense.
Interest income, net includes interest income from our short-term investments, partially offset by cash and non-cash charges related to our 2022 Credit Facility, including the amortization of debt issuance costs. (Benefit from) provision for income taxes represents federal and state current and deferred income tax expense.
The preparation of financial statements in conformity with GAAP requires us to make certain estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent asset and liabilities as of the balance sheet date, as well as the reported amounts of 53 Table of Contents revenue and expenses during the period.
The preparation of financial statements in conformity with GAAP requires us to make certain estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent asset and liabilities as of the balance sheet date, as well as the reported amounts of revenue and expenses during the period.
We believe that cash provided by operating activities and existing cash on hand, together with amounts available under our 2022 Credit Facility, will be sufficient to satisfy our anticipated cash requirements for the next twelve months and foreseeable future, including our expected capital expenditures for expansion of our CAVA restaurant base and manufacturing capabilities, operating lease obligations, working capital obligations, and debt service requirements.
We believe that cash provided by operating activities and existing cash on hand, together with amounts available under our 2022 Credit Facility, will be sufficient to satisfy our anticipated cash requirements for the next twelve months and foreseeable future, including our expected capital expenditures for expansion of our CAVA restaurant base, operating lease obligations, and other working capital obligations.
The majority of our purchase obligations related to amounts owed for produce and other ingredients and supplies, including supplies and materials used for new restaurant openings. Credit Facility Refer to Item 8. “Financial Statements and Supplementary Data”, Note 8 (Debt), for a description of our 2022 Credit Facility.
The majority of our purchase obligations related to amounts owed for produce and other ingredients and supplies, including supplies and materials used for new restaurant openings. Credit Facility Refer to Item 8. “Financial Statements and Supplementary Data,” Note 6 (Debt), for a description of our 2022 Credit Facility.
Our dips, spreads and dressings are centrally produced and sold in grocery stores. Segments We have two reportable segments: CAVA and Zoes Kitchen. CAVA reflects the financial results of all CAVA restaurants we operate. Zoes Kitchen reflects the financial results of all Zoes Kitchen locations we previously operated.
Our dips, spreads, and dressings are centrally produced for use in our restaurants and to be sold in grocery stores. Segments We have two reportable segments: CAVA and Zoes Kitchen. CAVA reflects the financial results of all CAVA restaurants we operate. Zoes Kitchen reflects the financial results of all Zoes Kitchen locations we previously operated.
Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA is net income (loss) adjusted to exclude interest (income) expense, net, provision for income taxes, and depreciation and amortization, further adjusted to exclude equity-based compensation, other income, net, impairment and asset disposal costs, restructuring and other costs, and certain non-recurring public company costs.
Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA is net income adjusted to exclude interest income, net, (benefit from) provision for income taxes, and depreciation and amortization, further adjusted to exclude equity-based compensation, other income, net, impairment and asset disposal costs, restructuring and other costs, and certain non-recurring public company costs.
“Financial Statements and Supplementary Data”, Note 11 (Leases) for more information on our operating leases. 2 Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms. We have excluded agreements that are cancellable without penalty.
“Financial Statements and Supplementary Data,” Note 8 (Leases) for more information on our operating leases. 2 Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms. We have excluded agreements that are cancellable without penalty.
We use CAVA Same Restaurant Sales Growth to assess the performance of existing CAVA restaurants that have been open for 365 days or longer, as the impact of new restaurant openings is excluded. As of December 31, 2023 and December 25, 2022, there were 236 and 163 CAVA restaurants, respectively, in such restaurant base.
We use CAVA Same Restaurant Sales Growth to assess the performance of existing CAVA restaurants that have been open for 365 days or longer, as the impact of new restaurant openings is excluded. As of December 29, 2024 and December 31, 2023, there were 307 and 236 CAVA restaurants, respectively, in such restaurant base.
Factors that influence labor costs include the minimum wage in the jurisdictions in which we operate, payroll tax legislation, inflation, the strength of the labor market for hourly Team Members, benefit costs, health care costs, and the number, size, and location of our restaurants.
Factors that influence labor costs include the minimum wage in the jurisdictions in which we operate, payroll tax legislation, inflation, the strength of the labor market for hourly Team Members, benefits costs, healthcare costs, and the number, size, and location of our restaurants.
Digital orders consist of orders made through catering, digital channels, such as the CAVA app and the CAVA website. Digital orders include orders fulfilled through third-party marketplace and native delivery and digital order pick-up. We use CAVA Digital Revenue Mix to evaluate and track the effectiveness of our coordinated digital infrastructure and network of delivery partners.
Digital orders are those made through our catering and digital channels, such as the CAVA app and the CAVA website, and include orders fulfilled through third-party marketplace and native delivery and digital order pick-up. 47 Table of Contents We use CAVA Digital Revenue Mix to evaluate and track the effectiveness of our coordinated digital infrastructure and network of delivery partners.
The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated is the cumulative loss incurred over the most recent three-year period.
The Company has assessed the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective positive evidence evaluated is the cumulative income earned over the most recent three-year period.
In addition to historical information, this discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties, and other factors outside the Company’s control, as well as assumptions, such as our plans, objectives, expectations, and intentions.
Securities and Exchange Commission on February 27, 2024. In addition to historical information, this discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties, and other factors outside the Company’s control, as well as assumptions, such as our plans, objectives, expectations, and intentions.
See Item 8. “Financial Statements and Supplementary Data”, Note 8 (Debt) and Note 11 (Leases) to our consolidated financial statements for more information. Our sources of liquidity could be affected by factors described Part I, Item 1A.
See Item 8. “Financial Statements and Supplementary Data,” Note 6 (Debt) and Note 8 (Leases) to our consolidated financial statements for more information. Our sources of liquidity could be affected by factors described Part I, Item 1A.
The Company makes judgments regarding the probable term for each lease, which can impact the classification and accounting for a lease as well as the amount of straight-line rent expense recognized in a period. Typically, restaurant leases have initial terms of 10 years and include five-year renewal options.
“Financial Statements and Supplementary Data.” Leases The Company makes judgments regarding the probable term for each lease, which can impact the classification and accounting for a lease as well as the amount of straight-line rent expense recognized in a period. Typically, restaurant leases have initial terms of ten years and include five-year renewal options.
Some of these limitations are: • Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; • Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; • Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on any applicable debts; • Adjusted EBITDA does not reflect period to period changes in taxes, income tax expense or the cash necessary to pay income taxes; • Adjusted EBITDA does not reflect the impact of earnings or cash charges resulting from matters we consider not to be indicative of our ongoing operations; 51 Table of Contents • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and • other companies in our industry may calculate Adjusted EBITDA and Adjusted EBITDA Margin differently than we do, limiting their usefulness as comparative measures.
Some of these limitations are: • Adjusted EBITDA and Adjusted Net Income do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; • Adjusted EBITDA and Adjusted Net Income do not reflect changes in, or cash requirements for, our working capital needs; • Adjusted EBITDA and Adjusted Net Income does not reflect financing activities of our business; • Adjusted EBITDA does not reflect period to period changes in taxes, income tax expense, or the cash necessary to pay income taxes; • Adjusted EBITDA does not reflect the impact of earnings or cash charges resulting from matters we consider not to be indicative of our ongoing operations; • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and • other companies in our industry may calculate Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Net Income margin differently than we do, limiting their usefulness as comparative measures.
General and administrative expenses include expenses associated with our Collaboration Center Organization that supports the development and operation of restaurants, including compensation and benefits, travel expenses, equity-based compensation, legal and professional fees, technology fees, and rent and other costs related to our collaboration centers.
General and administrative expenses include expenses associated with our Collaboration Center Organization which supports the development and operation of restaurants, including compensation and benefits, legal and professional fees, equity-based compensation, technology fees, travel expenses, marketing expenses, and rent and other costs related to the facilities in our Collaboration Center Organization.
In a 52-week fiscal year, the first fiscal quarter contains sixteen weeks and the second, third and fourth fiscal quarters each contain twelve weeks. In a 53-week fiscal year, the first fiscal quarter contains sixteen weeks, the second and third fiscal quarters each contain twelve weeks, and the fourth fiscal quarter contains thirteen weeks.
In a 53-week fiscal year, the first fiscal quarter contains sixteen weeks, the second and third fiscal quarters each 45 Table of Contents contain twelve weeks, and the fourth fiscal quarter contains thirteen weeks.
Equity-based compensation expense is measured based on the grant date fair value of those awards and is recognized on a straight-line basis over the requisite service period. Equity-based compensation expense is based on awards outstanding, and forfeitures are recognized as they occur. Equity-based compensation expense is included in general and administrative expenses in the consolidated statements of operations.
Equity-based compensation expense is measured based on the grant date fair value of those awards and is recognized on a straight-line basis over the requisite service period. Equity-based compensation expense is based on awards outstanding, and forfeitures are recognized as they occur.
Occupancy The increase in consolidated occupancy was primarily driven by a $17.0 million increase in our CAVA segment, partially offset by an $12.3 million decrease in our Zoes Kitchen segment. Refer to CAVA Segment Results above for more information.
Occupancy The increase in consolidated occupancy was primarily driven by a $12.0 million increase in our CAVA segment, partially offset by a $0.5 million decrease in our Zoes Kitchen segment. Refer to “CAVA Segment Results” above for more information.
The remainder of the increase in CAVA Revenue was driven by CAVA Same Restaurant Sales Growth of 17.9%, which consists of 10.4% from guest traffic increases and 7.5% from menu price increases and product mix, and the impact of a 53rd week in fiscal 2023.
The remainder of the increase in CAVA Revenue was driven by CAVA Same Restaurant Sales Growth of 13.4%, which consists of 8.7% from guest traffic increases and 4.7% from menu price increases and product mix, partially offset by $10.9 million of revenue in the 53rd week in fiscal 2023.
Refer to CAVA Segment Results above for more information. Food, Beverage, and Packaging The increase in consolidated food, beverage, and packaging was primarily driven by a $67.5 million increase in our CAVA segment, partially offset by a $32.2 million decrease in our Zoes Kitchen segment. Refer to CAVA Segment Results above for more information.
Refer to “CAVA Segment Results” above for more information. Food, Beverage, and Packaging The increase in consolidated food, beverage, and packaging was primarily driven by a $71.5 million increase in our CAVA segment, partially offset by a $1.1 million decrease in our Zoes Kitchen segment.
Historically, seasonal factors have caused our revenue to fluctuate from quarter to quarter. Our revenue per restaurant is typically lower in the first and fourth fiscal quarters due to reduced traffic as a result of colder temperatures and the holiday season.
Our revenue per restaurant is typically lower in the first and fourth fiscal quarters due to reduced traffic as a result of colder temperatures and the holiday season.
Key Performance Measures In assessing the performance of our business, in addition to considering a variety of measures in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), our management team also considers a variety of other key performance measures, including non-GAAP measures.
Key Performance Measures In assessing the performance of our business, in addition to considering a variety of measures in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), our management team also considers a variety of other key performance measures, including non-GAAP measures. The key performance measures used by our management for determining how our business is performing are detailed below.
CAVA Food, Beverage, and Packaging The increase in CAVA food, beverage, and packaging was primarily due to a $54.2 million increase from the 145 Net New CAVA Restaurant Openings during or subsequent to fiscal 2022, of which the majority was attributable to the 91 CAVA restaurants that were converted from Zoes Kitchen locations.
CAVA Food, Beverage, and Packaging The increase in CAVA food, beverage, and packaging was primarily due to a $47.6 million increase from the 130 Net New CAVA Restaurant Openings during or subsequent to fiscal 2023, of which a portion was attributable to the 28 CAVA restaurants that were converted from Zoes Kitchen locations.
CAVA AUV may also be impacted by the number of newer CAVA restaurants that are included in calculating CAVA AUV, as such restaurants typically achieve lower sales when they first open, which then increases as they mature. The 53rd week in fiscal 2023 has been excluded from the calculation of CAVA AUV.
CAVA AUV may also be impacted by the number of newer CAVA restaurants that are included in calculating CAVA AUV, as such restaurants typically achieve lower sales when they first open, which then increase as they mature.
CAVA Labor The increase in CAVA labor was primarily due to a $49.2 million increase from the 145 Net New CAVA Restaurant Openings during or subsequent to fiscal 2022, of which the majority was attributable to the 91 CAVA restaurants that were converted from Zoes Kitchen locations.
CAVA Labor The increase in CAVA labor was primarily due to the 130 Net New CAVA Restaurant Openings during or subsequent to fiscal 2023, of which a portion was attributable to the 28 CAVA restaurants that were converted from Zoes Kitchen locations.
Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of revenue. CAVA Revenue CAVA Revenue represents all revenue attributable to CAVA restaurants in the specified period, excluding two restaurants operating under a licensing arrangement. We use CAVA Revenue to evaluate and track the aggregate sales of food and beverages in CAVA restaurants.
CAVA Revenue CAVA Revenue represents all revenue attributable to CAVA restaurants in the specified period, excluding restaurants operating under licensing agreements. We use CAVA Revenue to evaluate and track the aggregate sales of food and beverages in CAVA restaurants.
Labor The increase in consolidated labor was primarily driven by a $64.5 million increase in our CAVA segment, partially offset by a $35.1 million decrease in our Zoes Kitchen segment. Refer to CAVA Segment Results above for more information.
Refer to “CAVA Segment Results” above for more information. 51 Table of Contents Labor The increase in consolidated labor was primarily driven by a $61.7 million increase in our CAVA segment, partially offset by a $1.5 million decrease in our Zoes Kitchen segment. Refer to “CAVA Segment Results” above for more information.
Other Operating Expenses The increase in consolidated other operating expenses was primarily driven by a $33.1 million increase in our CAVA segment, partially offset by a $18.6 million decrease in our Zoes Kitchen segment. Refer to CAVA Segment Results above for more information.
Other Operating Expenses The increase in consolidated other operating expenses was primarily driven by a $31.4 million increase in our CAVA segment, partially offset by a $0.9 million decrease in our Zoes Kitchen segment. Refer to “CAVA Segment Results” above for more information.
Interest (Income) Expense, Net The increase in interest (income) expense, net, was due to interest income associated with an increase in short term investments as a result of proceeds from the IPO. Net Income (Loss): Our net income increased as a result of the factors described above.
Interest Income, Net The increase in interest income, net, was due to interest income associated with higher short term investments as a result of proceeds from the IPO.
CAVA Other Operating Expenses The increase in CAVA other operating expenses was primarily due to a $22.8 million increase from 145 Net New CAVA Restaurant Openings during or subsequent to fiscal 2022, of which the majority was attributable to the 91 CAVA 48 Table of Contents restaurants that were converted from Zoes Kitchen locations.
CAVA Other Operating Expenses The increase in CAVA other operating expenses was primarily due to the 130 Net New CAVA Restaurant Openings during or subsequent to fiscal 2023, of which a portion was attributable to the 28 CAVA restaurants that were converted from Zoes Kitchen locations.
As a percentage of CAVA Revenue, CAVA other operating expenses was flat primarily due to operating leverage, partially offset by higher insurance costs in the current year and investments in the integrity of our physical spaces in support of our increased restaurant volumes.
As a percentage of CAVA Revenue, CAVA other operating expenses increased due in part to the aforementioned investments in the integrity of our physical spaces in support of our increased restaurant volumes, partially offset by operating leverage associated with higher sales.
The fair value of RSUs is equal to the fair value of our common stock at the date of grant. Recent Accounting Pronouncements Refer to Item 8. “Financial Statements and Supplementary Data”, Note 2 (Basis of Presentation and Significant Accounting Policies). JOBS Act Election We are currently an “emerging growth company,” as defined in the JOBS Act.
The fair value of RSUs is equal to the fair value of our common stock at the date of grant. Recent Accounting Pronouncements Refer to Item 8. “Financial Statements and Supplementary Data,” Note 2 (Basis of Presentation and Significant Accounting Policies).
General and Administrative Expenses The increase in general and administrative expenses was primarily due to higher performance-based incentive compensation associated with strong results, investments in our Collaboration Center Organization, including headcount, to support future growth, higher equity-based compensation associated with awards made in connection with the IPO, recurring public company costs, higher legal accruals, and $1.1 million in certain non-recurring IPO costs.
General and Administrative Expenses The increase in general and administrative expenses was primarily due to investments to support future growth, higher equity-based compensation associated with awards made in connection with the IPO, and recurring public company costs, partially offset by $1.1 million in certain non-recurring public company costs in the prior year.
For purposes of calculating CAVA AUV for fiscal 2022, the applicable measurement period is the trailing thirteen periods ended December 25, 2022. 3 As of the end of the specified reporting period. 4 See “Non-GAAP Financial Measures” below for a discussion of Adjusted EBITDA, and Adjusted EBITDA Margin and a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP measure.
For purposes of calculating CAVA AUV for fiscal 2023, the applicable measurement period is the trailing thirteen periods ended December 31, 2023, excluding the 53rd week. 3 See “Non-GAAP Financial Measures” below for a discussion of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Net Income margin and reconciliations of Adjusted EBITDA and Adjusted Net Income to net income, the most directly comparable GAAP measure. 46 Table of Contents Adjusted EBITDA margin and Adjusted Net Income margin are Adjusted EBITDA and Adjusted Net Income as a percentage of revenue, respectively.
“Financial Statements and Supplementary Data”, Note 2 (Basis of Presentation and Significant Accounting Policies) and Note 9 (Redeemable Preferred Stock and Stockholders’ Equity) for more information. Key Factors Affecting Our Business We have continued to see growth in revenue due to our Net New CAVA Restaurant openings and strong CAVA Same Restaurant Sales Growth.
“Financial Statements and Supplementary Data,” Note 2 (Basis of Presentation and Significant Accounting Policies) for more information. Key Factors Affecting Our Business We have continued to see growth in revenue due to our Net New CAVA Restaurant openings and strong CAVA Same Restaurant Sales Growth. CAVA Restaurant-Level Profit Margin increased to 25.0% in fiscal 2024 from 24.8% in fiscal 2023.
The Company is headquartered in Washington, D.C. and, as of December 31, 2023, operates 309 fast-casual CAVA restaurants in 24 states and Washington, D.C. The number of CAVA restaurants excludes two locations operating under a licensing arrangement and digital kitchens. The Company’s authentic Mediterranean cuisine unites taste and health, with a menu that features chef-crated and customizable bowls and pitas.
The Company is headquartered in Washington, D.C. and, as of December 29, 2024, operates 367 fast-casual CAVA Restaurants in 25 states and Washington, D.C. The Company’s authentic Mediterranean cuisine unites taste and health, with a menu that features chef-curated and customizable bowls and pitas.
Therefore, we expect that the capital expenditure requirements relating to Net New CAVA Restaurant Openings on a per restaurant basis in future periods will be significantly higher than we have experienced in the past few years as our conversion strategy is complete as of October 20, 2023.
Our conversion strategy was complete as of October 20, 2023; therefore, capital expenditure requirements relating to new CAVA Restaurant openings on a per restaurant basis in fiscal 2024 were higher than fiscal 2023, and will continue to be higher in future periods.
We estimate the 53rd week contributed an increase of approximately $11 million to revenue and approximately $2.5 million to income from operations. Fiscal 2023 results for CAVA Same-Restaurant Sales Growth and CAVA AUV have been adjusted to exclude the 53rd week for comparability. See the subsections under “Key Performance Measures” for more information.
Fiscal 2023 results for CAVA Same-Restaurant Sales Growth and CAVA AUV have been adjusted to exclude the 53rd week for comparability. See the subsections under “Key Performance Measures” for more information. Historically, seasonal factors have caused our revenue to fluctuate from quarter to quarter.
We expect general and administrative expenses to increase in the aggregate as we continue to expand our business but to decrease as a percentage of revenue in the long-term as our business grows. Depreciation and amortization primarily consists of depreciation of assets related to CAVA new restaurant openings, including leasehold improvements and equipment, and technology improvements.
We expect general and administrative expenses to increase in the aggregate as we continue to expand our business but to decrease as a percentage of revenue in the long-term.
“Risk Factors.” Depending on the severity and direct impact of these factors on us, we may not be able to secure additional financing on acceptable terms, or at all.
“Risk Factors.” Depending on the severity and direct impact of these factors on us, we may not be able to secure additional financing on acceptable terms, or at all. 54 Table of Contents Cash Overview We had cash and cash equivalents of $366.1 million and $332.4 million as of December 29, 2024 and December 31, 2023, respectively.
The remainder of the increase was primarily due to CAVA Same Restaurant Sales Growth of 17.9% and the impact of a 53rd week in fiscal 2023.
The remainder of the increase was primarily due to investments in the integrity of our physical spaces in support of our increased restaurant volumes and CAVA Same Restaurant Sales Growth of 13.4%, partially offset by the impact of a 53rd week in fiscal 2023.
Material Cash Commitments The following table summarizes current and long-term material cash requirements as of December 31, 2023, which we expect to fund primarily with operating cash flows: Payments Due by Fiscal Year (in thousands) Total 2024 2025-2026 2027-2028 Thereafter Operating leases 1 $ 435,517 $ 51,572 $ 111,307 $ 100,939 $ 171,699 Purchase obligations 2 7,553 6,626 927 — — __________________ 1 Refer to Item 8.
Material Cash Commitments The following table summarizes current and long-term material cash requirements as of December 29, 2024, which we expect to fund primarily with operating cash flows: Payments Due by Fiscal Year (in thousands) Total 2025 2026-2027 2028-2029 Thereafter Operating leases 1 $ 496,144 $ 59,936 $ 128,612 $ 112,777 $ 194,819 Purchase obligations 2 20,780 20,752 28 — — __________________ 1 Refer to Item 8.
CAVA Occupancy The increase in CAVA occupancy was primarily due to a $14.4 million increase from 145 Net New CAVA Restaurant Openings during or subsequent to fiscal 2022, of which the majority was attributable to the 91 CAVA restaurants that were converted from Zoes Kitchen locations.
CAVA Occupancy The increase in CAVA occupancy was primarily due to the 130 Net New CAVA Restaurant Openings during or subsequent to fiscal 2023, of which a portion was attributable to the 28 CAVA restaurants that were converted from Zoes Kitchen locations. As a percentage of CAVA Revenue, CAVA occupancy decreased primarily due to operating leverage associated with higher sales.
Investing Activities The increase in net cash used in investing activities for fiscal 2023 was primarily due to our investments in capital expenditures as a result of Net New CAVA Restaurant Openings, construction of our new production facility, and technology improvements.
Investing Activities The decrease in net cash used in investing activities was primarily due to higher capital expenditures in the prior year related to the construction of our new production facility and the volume and timing of new CAVA restaurant openings.
Restructuring and other costs consist mainly of expenses incurred in connection with closed Zoes Kitchen locations, public company readiness costs prior to our IPO, and costs related to our collaboration center relocation in fiscal 2022. 46 Table of Contents Pre-opening costs consist of expenses incurred prior to opening a new restaurant (including a new restaurant that is converted from a Zoes Kitchen location) and are made up primarily of manager salaries, relocation costs, supplies, recruiting expenses, payroll and training costs, and travel costs.
Pre-opening costs consist of expenses incurred prior to opening a new restaurant (including new restaurants that were converted from a Zoes Kitchen location) and are made up primarily of manager salaries, payroll and training costs, travel costs, supplies, relocation costs, and recruiting expenses.
For a discussion of the year ended December 25, 2022 compared to December 26, 2021, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our prospectus dated June 14, 2023 as filed with the U.S. Securities and Exchange Commission on June 16, 2023.
For a discussion of the year ended December 31, 2023 compared to December 25, 2022, please refer to the Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II of our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the U.S.
Our principal uses of liquidity for fiscal 2023 were to fund new restaurant openings, including the conversion of Zoes Kitchen locations into CAVA restaurants, the construction of our new production facility in Verona, VA and working capital needs.
For fiscal 2024, our operations were funded from cash flows from operations. Our principal uses of liquidity for fiscal 2024 were to fund new restaurant openings, working capital needs, and the finalization of construction of our new production facility in Verona, Virginia.
As of March 2, 2023, we no longer operate any Zoes Kitchen locations. Our CPG operations are included in Other.
As of March 2, 2023, we no longer operate any Zoes Kitchen locations. Our CPG operations are included in Other. See Item 8. “Financial Statements and Supplementary Data,” Note 13 (Segment Reporting) for more information.
The following table sets forth our key performance measures for the fiscal years indicated: ($ in thousands) 2023 2022 Change CAVA Revenue $ 717,060 $ 448,594 $ 268,466 CAVA Same Restaurant Sales Growth 1 17.9 % 14.2 % 3.7 % CAVA AUV 2 $ 2,639 $ 2,398 $ 241 CAVA Restaurant-Level Profit $ 177,488 $ 91,093 $ 86,395 CAVA Restaurant-Level Profit Margin 24.8 % 20.3 % 4.5 % CAVA Restaurants 3 309 237 72 Net New CAVA Restaurant Openings 72 73 (1) CAVA Digital Revenue Mix 36.0 % 34.5 % 1.5 % Net income (loss) $ 13,280 $ (58,987) $ 72,267 Adjusted EBITDA 4 $ 73,825 $ 12,615 $ 61,210 Net income (loss) margin 1.8 % (10.5) % 12.3 % Adjusted EBITDA margin 4 10.1 % 2.2 % 7.9 % 44 Table of Contents __________________ 1 CAVA Same Restaurant Sales Growth for fiscal 2023 is presented excluding the impact of the 53rd week. 2 For purposes of calculating CAVA AUV for fiscal 2023, the applicable measurement period is the trailing thirteen periods ended December 31, 2023, excluding the 53rd week.
The following table sets forth our key performance measures for the fiscal years indicated: ($ in thousands) 2024 2023 Change CAVA Revenue $ 954,273 $ 717,060 $ 237,213 CAVA Same Restaurant Sales Growth 1 13.4 % 17.9 % (4.5) % CAVA AUV 2 $ 2,865 $ 2,639 $ 226 CAVA Restaurant-Level Profit $ 238,113 $ 177,488 $ 60,625 CAVA Restaurant-Level Profit Margin 25.0 % 24.8 % 0.2 % CAVA Restaurants 367 309 58 Net New CAVA Restaurant Openings 58 72 (14) CAVA Digital Revenue Mix 36.4 % 36.0 % 0.4 % Net income $ 130,319 $ 13,280 $ 117,039 Adjusted EBITDA 3 $ 126,248 $ 73,825 $ 52,423 Adjusted Net Income 3 $ 50,219 $ 13,280 $ 36,939 Net income margin 13.5 % 1.8 % 11.7 % Adjusted EBITDA margin 3 13.1 % 10.1 % 3.0 % Adjusted Net Income margin 3 5.2 % 1.8 % 3.4 % __________________ 1 CAVA Same Restaurant Sales Growth for fiscal 2023 is presented excluding the impact of the 53rd week.
The 54 Table of Contents amount of the deferred tax assets considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth.
The amount of the deferred tax assets considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or if objective positive evidence in the form of cumulative income is no longer present. Equity-based Compensation The Company has issued stock options and RSUs.
CAVA Restaurants The following table details CAVA Restaurants for the fiscal years indicated: 2023 2022 Beginning of period 237 164 New CAVA restaurant openings, including converted Zoes Kitchen locations 73 74 Permanent closure (1) (1) End of period 309 237 45 Table of Contents CAVA Digital Revenue Mix CAVA Digital Revenue Mix represents the portion of CAVA revenue related to digital orders as a percentage of total CAVA revenue.
CAVA Restaurants The following table details CAVA Restaurants for the fiscal years indicated: 2024 2023 Beginning of period 309 237 New CAVA Restaurant openings 1 59 73 Permanent closure (1) (1) End of period 367 309 __________________ 1 New CAVA Restaurant openings during fiscal 2023 includes converted Zoes Kitchen locations.
Zoes Kitchen Segment Results The following table summarizes the results of the Zoes Kitchen segment for the fiscal years indicated: 2023 2022 Change ($ in thousands) $ % of Revenue $ % of Revenue $ % Restaurant revenue $ 3,867 100.0 % $ 108,392 100.0 % $ (104,525) N/M Restaurant operating expenses (excluding depreciation and amortization): Food, beverage, and packaging 1,141 29.5 33,367 30.8 (32,226) N/M Labor 1,506 38.9 36,573 33.7 (35,067) N/M Occupancy 508 13.1 12,814 11.8 (12,306) N/M Other operating expenses 889 23.0 19,538 18.0 (18,649) N/M Total restaurant operating expenses 4,044 104.6 102,292 94.4 (98,248) N/M Restaurant-level (loss) profit $ (177) (4.6) % $ 6,100 5.6 % $ (6,277) N/M __________________ N/M Data not meaningful As of March 2, 2023, the Company no longer operates any Zoes Kitchen locations, which resulted in the decreases above.
Zoes Kitchen Segment Results The following table summarizes the results of the Zoes Kitchen segment for the fiscal years indicated: 2024 2023 Change ($ in thousands) $ % of Revenue $ % of Revenue $ % Restaurant revenue $ — — % $ 3,867 100.0 % $ (3,867) N/M Restaurant operating expenses (excluding depreciation and amortization): Food, beverage, and packaging — — 1,141 29.5 (1,141) N/M Labor — — 1,506 38.9 (1,506) N/M Occupancy — — 508 13.1 (508) N/M Other operating expenses — — 889 23.0 (889) N/M Total restaurant operating expenses — — 4,044 104.6 (4,044) N/M Restaurant-level loss $ — — % $ (177) (4.6) % $ 177 N/M __________________ N/M data not meaningful As of March 2, 2023, the Company no longer operates any Zoes Kitchen locations, which resulted in the decreases above. 50 Table of Contents Other Results The following table summarizes remaining activity related to our CPG operations for the fiscal years indicated: 2024 2023 Change ($ in thousands) $ % of Revenue $ % of Revenue $ % Revenue $ 9,440 100.0 % $ 7,773 100.0 % $ 1,667 21.4 % Food, beverage, and packaging 5,002 53.0 4,080 52.5 922 22.6 Other operating expenses 746 7.9 658 8.5 88 13.4 The increases noted above were primarily a result of increased sales of dips, spreads, and dressings.
The remainder of the increase was primarily due to CAVA Same Restaurant Sales Growth of 17.9% and the impact of a 53rd week in fiscal 2023. These increases include the impact of higher average hourly wages. As a percentage of CAVA Revenue, CAVA labor decreased due to strong sales, partially offset by an increase in average hourly wages.
The remainder of the increase was primarily due to the impact of higher average hourly wages of 7%, partially offset by the impact of a 53rd week in fiscal 2023.
Consolidated Results The following table summarizes our consolidated results of operations for the fiscal years indicated: 2023 2022 Change ($ in thousands) $ % of Revenue $ % of Revenue $ % Revenue $ 728,700 100.0 % $ 564,119 100.0 % $ 164,581 29.2 % Operating expenses: Restaurant operating costs (excluding depreciation and amortization) Food, beverage, and packaging 213,458 29.3 179,988 31.9 33,470 18.6 Labor 187,326 25.7 157,891 28.0 29,435 18.6 Occupancy 58,319 8.0 53,669 9.5 4,650 8.7 Other operating expenses 89,251 12.2 74,587 13.2 14,664 19.7 Total restaurant operating expenses 548,354 75.3 466,135 82.6 82,219 17.6 General and administrative expenses 101,491 13.9 70,037 12.4 31,454 44.9 49 Table of Contents Depreciation and amortization 47,433 6.5 42,724 7.6 4,709 11.0 Restructuring and other costs 6,080 0.8 5,923 1.0 157 2.7 Pre-opening costs 15,718 2.2 19,313 3.4 (3,595) (18.6) Impairment and asset disposal costs 4,899 0.7 19,753 3.5 (14,854) (75.2) Total operating expenses 723,975 99.4 623,885 110.6 100,090 16.0 Income (loss) from operations 4,725 0.6 (59,766) (10.6) 64,491 N/M Interest (income) expense, net (8,852) (1.2) 47 — (8,899) N/M Other income, net (471) (0.1) (919) (0.2) 448 (48.7) Income (loss) before income taxes 14,048 1.9 (58,894) (10.4) 72,942 N/M Provision for income taxes 768 0.1 93 — 675 N/M Net income (loss) $ 13,280 1.8 % $ (58,987) (10.5) % $ 72,267 N/M __________________ N/M Data not meaningful Revenue The increase in consolidated revenue was primarily driven by a $268.5 million increase in our CAVA segment, partially offset by a $104.5 million decrease in our Zoes Kitchen segment, which was no longer operating as of March 2, 2023.
Consolidated Results The following table summarizes our consolidated results of operations for the fiscal years indicated: 2024 2023 Change ($ in thousands) $ % of Revenue $ % of Revenue $ % Revenue $ 963,713 100.0 % $ 728,700 100.0 % $ 235,013 32.3 % Operating expenses: Restaurant operating costs (excluding depreciation and amortization) Food, beverage, and packaging 284,743 29.5 213,458 29.3 71,285 33.4 Labor 247,490 25.7 187,326 25.7 60,164 32.1 Occupancy 69,851 7.2 58,319 8.0 11,532 19.8 Other operating expenses 119,824 12.4 89,251 12.2 30,573 34.3 Total restaurant operating expenses 721,908 74.9 548,354 75.3 173,554 31.6 General and administrative expenses 120,500 12.5 101,491 13.9 19,009 18.7 Depreciation and amortization 60,355 6.3 47,433 6.5 12,922 27.2 Restructuring and other costs 580 0.1 6,080 0.8 (5,500) (90.5) Pre-opening costs 12,197 1.3 15,718 2.2 (3,521) (22.4) Impairment and asset disposal costs 5,055 0.5 4,899 0.7 156 3.2 Total operating expenses 920,595 95.5 723,975 99.4 196,620 27.2 Income from operations 43,118 4.5 4,725 0.6 38,393 N/M Interest income, net (16,474) (1.7) (8,852) (1.2) (7,622) 86.1 Other income, net (318) — (471) (0.1) 153 (32.5) Income before taxes 59,910 6.2 14,048 1.9 45,862 N/M (Benefit from) provision for income taxes (70,409) (7.3) 768 0.1 (71,177) N/M Net income $ 130,319 13.5 % $ 13,280 1.8 % $ 117,039 N/M __________________ N/M data not meaningful Revenue The increase in consolidated revenue was primarily driven by a $237.2 million increase in our CAVA segment, partially offset by a $3.9 million decrease in our Zoes Kitchen segment, which was no longer operating as of March 2, 2023.
Cash Flows The following table summarizes our cash flows for the fiscal years indicated: Change ($ in thousands) 2023 2022 $ % Net cash provided by operating activities $ 97,101 $ 6,038 $ 91,063 N/M Net cash used in investing activities (138,806) (104,161) (34,645) 33.3 % Net cash provided by (used in) financing activities 335,008 (3,084) 338,092 N/M Net change in cash and cash equivalents $ 293,303 $ (101,207) $ 394,510 (389.8) % __________________ N/M Data not meaningful Operating Activities The increase in net cash provided by operating activities for fiscal 2023 was primarily due to improved operating performance, the impact of working capital changes primarily in accrued expenses and other associated with performance-based incentive compensation, and interest income associated with an increase in short term investments as a result of proceeds from the IPO.
Cash Flows The following table summarizes our cash flows for the fiscal years indicated: Change ($ in thousands) 2024 2023 $ % Net cash provided by operating activities $ 161,027 $ 97,101 $ 63,926 65.8 % Net cash used in investing activities (108,131) (138,806) 30,675 (22.1) % Net cash (used in) provided by financing activities (19,204) 335,008 (354,212) (105.7) % Net change in cash and cash equivalents $ 33,692 $ 293,303 $ (259,611) (88.5) % Operating Activities The increase in net cash provided by operating activities was primarily due to improved operating performance and interest income associated with an increase in short-term investments as a result of proceeds from the IPO.
Fiscal year 2023 was a 53-week period that ended on December 31, 2023 and fiscal year 2022 was a 52-week period that ended on December 25, 2022. Fiscal 2023 includes a 53rd week that is not included in fiscal 2022.
Fiscal year 2024 was a 52-week period that ended on December 29, 2024 and fiscal year 2023 was a 53-week period that ended on December 31, 2023. Fiscal 2023 included a 53rd week that is not included in fiscal 2024. We estimate the 53rd week contributed $10.9 million to revenue and approximately $2.5 million to income from operations.
The remainder of the increase was primarily due to CAVA Same Restaurant Sales Growth of 17.9% and the impact of a 53rd week in fiscal 2023. As a percentage of CAVA Revenue, CAVA food, beverage, and packaging decreased primarily due to lower input costs and a higher incidence of premium menu items driving favorable product mix.
The remainder of the increase was primarily due to CAVA Same Restaurant Sales Growth of 13.4%, partially offset by the impact of a 53rd week in fiscal 2023. 49 Table of Contents As a percentage of CAVA Revenue, CAVA food, beverage, and packaging increased primarily due to input costs associated with the June 3, 2024 launch of grilled steak.
Pre-Opening Costs The decrease in pre-opening costs was due to improved cost efficiencies, partially offset by the timing and volume of Net New CAVA Restaurant Openings. Impairment and Asset Disposal Costs The decrease in impairment and asset disposal costs was primarily due to higher costs in the prior year in connection with Zoes Kitchen actual and anticipated closures.
Restructuring and Other Costs The decrease in restructuring and other costs was primarily due to costs incurred in the prior year period in connection with our Zoes Kitchen conversion strategy, public company readiness, and the relocation of our collaboration center. Pre-opening Costs The decrease in pre-opening costs was due to the volume and timing of new CAVA restaurant openings.
The following tables provides a reconciliation of net income (loss) to Adjusted EBITDA and net income (loss) margin to Adjusted EBITDA Margin for the fiscal years indicated: ($ in thousands) 2023 2022 Net income (loss) $ 13,280 $ (58,987) Non-GAAP Adjustments Interest (income) expense, net (8,852) 47 Provision for income taxes 768 93 Depreciation and amortization 47,433 42,724 Equity-based compensation 9,575 3,981 Other income, net (471) (919) Impairment and asset disposal costs 4,899 19,753 Restructuring and other costs 6,080 5,923 Certain non-recurring public company costs 1,113 — Adjusted EBITDA $ 73,825 $ 12,615 Revenue $ 728,700 $ 564,119 Net income (loss) margin 1.8 % (10.5) % Adjusted EBITDA margin 10.1 % 2.2 % Liquidity and Capital Resources We assess our liquidity in terms of our ability to generate adequate amounts of cash to meet current and future needs.
Because of these limitations, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Net Income margin should not be considered as measures of discretionary cash available to invest in business growth or to reduce any applicable indebtedness. 53 Table of Contents The following table provides a reconciliation of net income to Adjusted EBITDA and net income margin to Adjusted EBITDA margin for the fiscal years indicated: ($ in thousands) 2024 2023 Net income $ 130,319 $ 13,280 Non-GAAP Adjustments Interest income, net (16,474) (8,852) (Benefit from) provision for income taxes (70,409) 768 Depreciation and amortization 60,355 47,433 Equity-based compensation 17,140 9,575 Other income, net (318) (471) Impairment and asset disposal costs 5,055 4,899 Restructuring and other costs 580 6,080 Certain non-recurring public company costs — 1,113 Adjusted EBITDA $ 126,248 $ 73,825 Revenue $ 963,713 $ 728,700 Net income margin 1 13.5 % 1.8 % Adjusted EBITDA margin 13.1 % 10.1 % __________________ 1 Net income margin for fiscal 2024 includes the impact of the $80.1 million benefit from the VA Release.
Future operating and development results will be impacted by our ability to successfully expand our restaurant base and navigate challenges and uncertainties such as macroeconomic conditions including commodity inflation, mandated minimum wage increases, the impacts of COVID-19 or other such pandemics, and supply chain constraints. 43 Table of Contents Fiscal Calendar and Seasonality We operate on a 52-week or 53-week fiscal year that ends on the last Sunday of the calendar year.
Future results will be impacted by our ability to continue to successfully expand our restaurant base and navigate challenges and uncertainties such as macroeconomic conditions that may impact guest demand, commodity and wage inflation, and supply chain constraints.
Depreciation and Amortization The increase in depreciation and amortization was primarily driven by the addition of assets from 145 Net New CAVA Restaurant Openings during or subsequent to fiscal 2022 and technology improvements, partially offset by the disposal of assets at 125 closed Zoes Kitchen locations. 50 Table of Contents Restructuring and Other Costs The increase in restructuring and other costs was primarily due to costs associated with closed Zoes Kitchen locations and public company readiness, partially offset by costs incurred in the prior year in connection with the relocation of our collaboration center.
Depreciation and Amortization The increase in depreciation and amortization was primarily driven by the addition of assets from 130 Net New CAVA Restaurant Openings during or subsequent to fiscal 2023, the commencement of operations at our new manufacturing facility in Verona, Virginia in the first quarter of fiscal 2024, and technology improvements.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs a result, any menu price increases at our restaurants would only offset a proportionate increase in occupancy and related expenses. Labor Costs Wages paid in our restaurants are impacted by, among other factors, changes in federal and state hourly minimum wage rates. Accordingly, changes in the federal and state hourly minimum wage rates directly affect our labor costs.
Biggest changeAs a result, any menu price increases at our restaurants would only offset a proportionate increase in occupancy and related expenses. Interest Rate Risk We are exposed to interest rate risk through fluctuations of interest rates on our investments through our cash in our money market accounts.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk In the normal course of business, we are exposed to market risks, including commodity and food price risks, interest rate risk, effects of inflation, and labor costs. We currently do not enter into derivatives or other financial instruments for trading or speculative purposes.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk In the normal course of business, we are exposed to market risks, including commodity and food price risks, labor costs, effects of inflation, and interest rate risk. We currently do not enter into derivatives or other financial instruments for trading or speculative purposes.
We currently have operations only in the United States and do not have material foreign currency exposure. Commodity and Food Price Risks We purchase certain products that are affected by commodity prices and are, therefore, subject to price volatility caused by market conditions, supply chain interruptions, weather, and other factors which are not within our control.
We currently have operations only in the United States and do not have material foreign currency exposure. Commodity and Food Price Risks We purchase certain products that are affected by commodity prices and are, therefore, subject to price volatility caused by market conditions, supply chain interruptions, weather, the impact of tariffs, and other factors which are not within our control.
We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. Due to the short-term nature of our investments, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates.
We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. Due to the short-term nature of our investments, we have not been exposed to, nor do we anticipate being exposed to, material 57 Table of Contents risks due to changes in interest rates.
While we have been able to partially offset inflation and other changes in operating expenses by gradually increasing menu prices, coupled with more efficient purchasing practices, productivity improvements and greater economies of scale, there can be no assurance that we will be able to continue to do so in the future.
Effects of Inflation Inflation impacts our restaurant operating expenses. While we have been able to partially offset inflation and other changes in operating expenses by gradually increasing menu prices, coupled with more efficient purchasing practices, productivity improvements, and greater economies of scale, there can be no assurance that we will be able to continue to do so in the future.
While we generally seek to offset any wage increases with operational efficiencies and by leveraging CAVA Same Restaurant Sales Growth, such measures may not fully offset any wage increases and we may seek to increase our menu prices.
While we generally seek to offset any wage increases with operational efficiencies and by leveraging CAVA Same Restaurant Sales Growth, such measures may not fully offset any wage increases and we may seek to increase our menu prices. We cannot assure you that we will be able to fully offset wage increases through any of these measures.
Changes in interest rates affect the interest income we earn, and therefore impact our cash flows and results of operations. As of December 31, 2023, we had $332.4 million of cash and cash equivalents consisting of bank accounts and money market funds.
Changes in interest rates affect the interest income we earn, and therefore impact our cash flows and results of operations. As of December 29, 2024, we had $366.1 million of cash and cash equivalents consisting of bank accounts, money market funds, and other cash equivalent investments.
A hypothetical decrease of 100 basis points to current prevailing market rates applied to our cash and cash equivalents balance as of December 31, 2023, would result in a decrease of $3.3 million in investment income over a twelve month period. Effects of Inflation Inflation impacts our restaurant operating expenses.
A hypothetical decrease of 100 basis points to current prevailing market rates applied to our cash and cash equivalents balance as of December 29, 2024, would result in a decrease of $3.6 million in investment income over a twelve month period. 58 Table of Contents
Wages and benefits are also affected by supply and demand forces in specific regions. We currently pay all our Team Members more than the applicable minimum wage in the area where they work. Competition in these communities for qualified Team Members could require us to pay higher wages and provide greater benefits.
Accordingly, changes in the federal and state hourly minimum wage rates directly affect our labor costs. Wages and benefits are also affected by supply and demand forces in specific regions. We currently pay all our Team Members more than the applicable minimum wage in the area where they work.
In addition, the COVID-19 pandemic and recent macroeconomic conditions have resulted in aggressive competition for talent, wage inflation and pressure to improve benefits, and workplace conditions to remain competitive.
Competition in these communities for qualified Team Members could require us to pay higher wages and provide greater benefits. In addition, recent macroeconomic conditions have resulted in aggressive competition for talent, wage inflation and pressure to improve benefits, and workplace conditions to remain competitive.
However, we cannot assure you that these measures will be able to fully offset any increase in commodity prices, which could increase restaurant operating costs as a percentage of restaurant sales and impact our results from operations. 55 Table of Contents Interest Rate Risk We are exposed to interest rate risk through fluctuations of interest rates on our investments through our cash in our money market accounts.
However, we cannot assure you that these measures will be able to fully offset any increase in commodity prices, which could increase restaurant operating costs as a percentage of restaurant sales and impact our results from operations. Labor Costs Wages paid in our restaurants are impacted by, among other factors, changes in federal and state hourly minimum wage rates.
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We cannot assure you that we will be able to fully offset wage increases through any of these measures. 56 Table of Contents

Other CAVA 10-K year-over-year comparisons