CAVA Group, Inc. (CAVA)

Return on equity (ROE)

		Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022
Net income (ttm)	US$ in thousands	142,033	130,319	53,749	42,616	29,414	13,280	-7,615	-26,341	-41,110	-58,987	-60,660
Total stockholders’ equity	US$ in thousands	726,174	695,566	616,437	595,437	580,810	570,802	565,723	555,809	211,267	213,805	213,805
ROE		19.56%	18.74%	8.72%	7.16%	5.06%	2.33%	-1.35%	-4.74%	-19.46%	-27.59%	-28.37%

March 31, 2025 calculation

ROE = Net income (ttm) ÷ Total stockholders’ equity
= $142,033K ÷ $726,174K
= 19.56%

The analysis of CAVA Group, Inc.'s return on equity (ROE) over the specified periods reveals a significant and consistent improvement in profitability and shareholder return metrics. Initially, as of September 30, 2022, the company reported a negative ROE of -28.37%, indicating that the company was experiencing losses relative to shareholders' equity during that period, which is often symptomatic of challenging operating conditions or substantial investments impacting net income negatively.

Over the subsequent quarters, the ROE demonstrated progressive improvement. By December 31, 2022, the negative ROE narrowed slightly to -27.59%, evidencing a marginal reduction in losses or improved financial performance. This trend continued into the first quarter of 2023, with ROE improving further to -19.46%, suggesting more effective management, revenue growth, or operational efficiencies contributing to reduced losses.

During the second quarter of 2023, ROE approached closer to break-even territory at -4.74%, marking a noteworthy turnaround from prior periods of significant negative returns. By September 30, 2023, the ROE had almost reached zero at -1.35%, indicating that the company's net income was nearly offsetting shareholders' equity, reflecting substantial progress towards profitability.

The most remarkable development occurs from the end of 2023 onward, where the ROE turns positive and exhibits a strong upward trajectory. As of December 31, 2023, it reaches 2.33%, signaling that net income exceeded shareholders’ equity, transitioning the company into a profitable phase. This positive trend continues into March 31, 2024, with ROE rising to 5.06%, and further strengthening to 7.16% by June 30, 2024.

The positive momentum persists through subsequent periods, with ROE escalating to 8.72% on September 30, 2024, and markedly increasing to 18.74% by December 31, 2024. By the end of the first quarter of 2025, the ROE has reached 19.56%, indicating a robust return for shareholders and reflecting sustained earnings growth relative to shareholders’ equity.

Overall, the progression from heavily negative ROE to positive, rising into double digits within approximately two years, underscores significant improvements in profitability, operational performance, and effective use of equity. The upward trend signifies that CAVA Group, Inc. has transitioned from a period of financial losses towards generating strong returns on shareholders' investments, highlighting a comprehensive and successful turnaround in its core financial health.