CAVA Group, Inc. CAVA closed fiscal 2025 with strong revenue momentum, though EBITDA growth trailed, reflecting limited near-term flow-through. Fiscal fourth-quarter revenues increased 21.2% year over year to approximately $273 million, supported by unit expansion. In contrast, adjusted EBITDA rose 2.6% to $25.8 million, indicating limited incremental flow-through to profitability.
The disparity primarily reflects elevated growth-related investments and costs associated with expansion. Preopening expenses in the fiscal fourth quarter increased to $4.6 million from $2.7 million in the prior-year quarter due to a higher number of restaurants under development and increased per-unit costs. These costs, alongside continued unit expansion, likely weighed on near-term EBITDA conversion.
Operating costs increased during the fiscal fourth quarter, contributing to the muted margin progression. Food, beverage and packaging costs rose 50 basis points year over year, while other operating expenses increased 60 basis points, caused by a higher mix of third-party delivery and continued investment in technology, including system rollouts. Labor costs provided some offset, demonstrating leverage as a percentage of revenues, though partially offset by wage investments.
Management highlighted continued investments in operations, technology and team members, including field leadership and system infrastructure, to support scaling. These investments are reflected in general and administrative expenses, which were 10.5% of revenues in the fiscal fourth quarter versus 10.4% in the prior year, remaining broadly stable despite incremental investment.
Looking ahead, margin progression is expected to remain influenced by ongoing investments. The company guided to continued elevated preopening costs in fiscal 2026 alongside 74 to 76 net new restaurant openings, and noted an approximately 100 basis point headwind to restaurant-level margins from the introduction of salmon. With limited pricing actions planned, the gap between revenue growth and EBITDA expansion reflects a business continuing to invest in growth and infrastructure. While these dynamics reflect ongoing investment, the persistence of cost pressures and limited pricing flexibility could keep margin expansion gradual in the near term.