Cava Group (CAVA) may be down double digits this year, but analysts remain bullish on the fast-casual chain even as Trump tariffs ripple through the U.S. restaurant industry.
For restaurants, the challenge of Trump’s trade war is twofold: rising input costs and a potential slowdown in consumer demand.
Michelle Korsmo, President & CEO of the National Restaurant Association, warned last month that tariffs would likely push up food and packaging costs, raising prices for both businesses and consumers.
“Applying new tariffs at this scale will create change and disruption that restaurant operators will have to navigate to keep their restaurants open,” she said.
“The biggest concerns for restaurant operators, from community restaurants to national brands, are that tariffs will hike food and packaging costs and add uncertainty to managing availability while pushing prices up for consumers.”
Some of the biggest names in fast-casual dining are down by double digits in 2025
Sweetgreen (SG) has plunged 35%, Shake Shack (SHAK) is down 27.3%, and Chipotle (CMG) has dropped 14.5%.
Cava stock is no exception.After reporting fourth-quarter earnings, shares of Cava Group (CAVA) dropped 10%, despite beating Wall Street expectations on both Q4 and full-year 2024 growth.
Cava’s stock is down 14.3% this year.
While part of that pullback is a natural correction after the multi-year rally in fast-casual names, there’s also growing anxiety around Trump’s tariffs and their implications for the economy.
Wall Street doubles down on Cava stock
Cava CEO and co-founder Brett Schulman said in an April interview with CNBC he isn’t fretting about Trump’s tariffs.
That’s because, he said, the company sources much of its food domestically, providing a buffer from tariff-related disruptions.
While Cava does import produce like avocados from Mexico, these items remain exempt under the U.S.-Mexico-Canada free trade agreement.
Imports from the European Union — such as olive oil and kalamata olives from Greece — are subject to a 10% tariff.
“We’re really working to mitigate any need to pass those costs to our guests, much as we’ve done in the past five or six years as we’ve been able to underprice inflation by almost 800 basis points,” Schulman said.
He added that Cava’s “consumer has continued to be really resilient,” and the company hasn’t seen a drop in business.
Despite the broader pullback in the sector, Cava is outperforming rivals. As of Friday, the stock was trading at $96.65 — higher than Shake Shack at $94.37, and far above Chipotle ($51.56) and Sweetgreen ($20.85).
Wall Street is taking notice. Analysts at Bernstein recently upgraded the stock to Outperform from Market Perform, raising their price target to $115, more than 17% above current levels.
“We expect CAVA to retain its margins of 25% even if a negative macro scenario were to unfold,” the firm wrote. “With limited reliance on imports, we see limited scope for margin compression amid continued sales expansion.”
JPMorgan analysts also upgraded Cava to Overweight, setting a price target of $110.
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