Restaurant chain Cava cuts sales forecast again as younger diners pull back

By Anshi Sancheti

Nov 4 (Reuters) - Mediterranean restaurant chain Cava Group CAVA.N cut annual same-store sales growth forecast for the second time this year on Tuesday, signaling softer dining-out demand, especially from lower-income and younger customers.

Shares of the Washington, D.C.-based company were down 4% after the bell.

Cava now expects full-year same-restaurant sales to rise between 3% and 4%, down from its prior forecast of 4% to 6%.

Fast-casual brands such as Chipotle Mexican Grill CMG.N and Cava have warned of margin pressures and slowing demand from the crucial segment of younger, lower-to-middle-income consumers who are cutting back on discretionary spending.

Last week, Chipotle shares fell after the burrito chain cut its sales forecast for the third time this year, while fast-food chains such as Burger King and Domino's Pizza DPZ.N have gained from their focus on value menu items.

Customers aged 25 to 35 are also under strain and pulling back on spending amid rising unemployment, resumed student loan payments and higher rents, Cava CFO Tricia Tolivar told Reuters.

The company also lowered its annual restaurant-level profit margin forecast to 24.4%–24.8% from 24.8%–25.2%.

“In the current quarter, there’s about a 20 basis point impact related to tariffs, largely for our imported beef that we’ve served to our guests every day,” Tolivar added.

Revenue for the reported third quarter was $289.8 million, below estimates of $292.59 million, helped by demand for its dinner and lunch menu.

The company posted quarterly earnings of 12 cents per share for the period ended October 5, compared with analysts’ estimates of 13 cents, according to data compiled by LSEG.