CAVA Group, Inc. (CAVA)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 25.09% | 24.75% | 9.80% | 7.52% | 12.67% |
| Operating profit margin | 4.47% | 0.65% | -2.62% | -5.43% | 7.77% |
| Pretax margin | 6.22% | 1.93% | -10.44% | -7.45% | 8.38% |
| Net profit margin | 13.52% | 1.82% | -10.46% | -7.48% | 6.53% |
The profitability ratios for CAVA Group, Inc. over the period from December 2020 to December 2024 reflect a trend of significant improvement following a challenging period in 2021 and 2022.
Initially, the gross profit margin decreased from 12.67% in 2020 to 7.52% in 2021, indicating a reduction in the proportion of revenue remaining after deducting cost of goods sold. This decline persisted into 2022, with the margin declining further to 9.80%. However, a substantial turnaround occurred in 2023 and 2024, with gross profit margins increasing to 24.75% and slightly higher to 25.09%, respectively. This sharp increase suggests improved pricing strategies, cost management, or a favorable change in sales mix.
Operating profit margin figures reveal a similar initial decline, falling from 7.77% in 2020 to a negative 5.43% in 2021 and continuing into 2022 at -2.62%. These negative margins reflect operational challenges or higher operating costs relative to revenue. By 2023, the operating margin turned positive at 0.65%, and further increased to 4.47% in 2024, indicating a significant recovery in operational efficiency and profitability.
Pre-tax margin figures also illustrate this pattern. The margin declined sharply into negative territory in 2021 and 2022, reaching -7.45% and -10.44%, respectively. The trend reversed in 2023 and 2024, with margins improving to 1.93% and 6.22%, respectively, highlighting the company's enhanced ability to generate profit before taxes.
Net profit margin, which accounts for all expenses, presents a similar pattern of recovery. From a positive 6.53% in 2020, the margin deteriorated to -7.48% in 2021 and -10.46% in 2022, reflecting net losses during those years. The margin improved markedly in 2023 to 1.82%, and further increased to 13.52% in 2024, demonstrating a substantial turnaround in net profitability and overall financial health.
Overall, the data indicates that CAVA Group, Inc. experienced profitability challenges in 2021 and 2022 but has demonstrated a strong recovery and improved profitability metrics in 2023 and 2024. The company’s strategic adjustments and operational improvements seem to have effectively restored its ability to generate sustainable profit margins across all levels of the income statement.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 3.69% | 0.48% | -2.26% | -7.49% | 4.16% |
| Return on assets (ROA) | 11.14% | 1.35% | -9.01% | -10.31% | 3.49% |
| Return on total capital | 6.24% | 5.50% | -27.52% | -12.06% | 8.31% |
| Return on equity (ROE) | 18.74% | 2.33% | -27.59% | -13.89% | 6.98% |
The profitability ratios of CAVA Group, Inc. over the period from December 31, 2020, to December 31, 2024, exhibit a trajectory marked by significant fluctuations, reflecting varying operational and financial performance.
Starting with the Operating Return on Assets (Operating ROA), the data indicates a recovery from a substantial decline. In 2020, the Operating ROA stood at 4.16%, but it deteriorated sharply to a negative value of -7.49% in 2021 and further dipped to -2.26% in 2022. The negative trend persisted through 2023, with a slight turnaround recorded at 0.48%, and improved notably to 3.69% by 2024. This trend suggests the company's core operational efficiency was adversely affected during 2021 and 2022 but started to regain momentum by 2023 and 2024.
The Return on Assets (ROA), incorporating the effects of both operating performance and financial leverage, mirrors this pattern. Beginning at 3.49% in 2020, it experienced a more severe decline to -10.31% in 2021 and -9.01% in 2022, indicating significant challenges in generating net income relative to total assets during those years. A reversal is observed in 2023 with a modest positive return of 1.35%, culminating in a substantial improvement to 11.14% in 2024, which demonstrates a significant enhancement in overall asset profitability.
The Return on Total Capital (ROTC), which assesses profitability relative to all capital invested, shows a similar pattern. It was 8.31% in 2020, then declined markedly to -12.06% in 2021 and further worsened to -27.52% in 2022, indicating a period of unprofitable capital utilization. Improvements emerged in subsequent years with ROTC increasing to 5.50% in 2023 and slightly rising to 6.24% in 2024, reflecting an overall return to more efficient capital deployment.
Regarding Return on Equity (ROE), a key measure of shareholder earnings, the trend is consistent with the other ratios. It was 6.98% in 2020, sharply declined to -13.89% in 2021, and further to -27.59% in 2022, illustrating that shareholders experienced negative returns in those years. A positive shift occurred in 2023 with ROE rising to 2.33%, and a substantial increase to 18.74% was achieved in 2024, indicating enhanced profitability and value creation for equityholders.
In summary, CAVA Group, Inc. experienced a challenging period around 2021 and 2022 characterized by negative profitability ratios across various measures. The company demonstrated significant recovery beginning in 2023, culminating in notable improvements by 2024, reflecting a strengthening of operational efficiency, overall asset utilization, and shareholder returns.