CAVA Group Inc. (NYSE: CAVA) saw its stock plummet 5.06% in Friday's intraday trading, following a sharp decline in after-hours trading on Thursday. The Mediterranean fast-casual restaurant chain's stock took a hit despite reporting better-than-expected first-quarter 2025 earnings, as investors focused on the company's cautious full-year outlook.

For Q1 2025, CAVA reported impressive results, with revenue of $331.83 million surpassing analyst expectations of $326.88 million. Adjusted earnings per share came in at $0.22, significantly beating the estimated $0.14. The company also posted strong same-restaurant sales growth of 10.8%, outpacing expectations of 10.4%. However, these positive results were overshadowed by the company's conservative guidance for the rest of the year.

The primary factor driving the stock's decline appears to be CAVA's full-year 2025 guidance. While the company raised its forecast for new restaurant openings to 64-68 from the previous 62-66, it maintained its same-restaurant sales growth projection at 6-8%. This outlook falls short of the FactSet analyst consensus of 8.4% and indicates a potential slowdown compared to the robust 10.8% achieved in Q1. The discrepancy between the strong Q1 performance and the unchanged full-year guidance has led investors to reassess the company's growth trajectory and valuation, resulting in the significant stock price drop.