CAVA GROUP, INC.

CAVA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

CAVA Group, Inc. (together with its wholly owned subsidiaries, referred to as the “Company,” “CAVA,” “we,” “us,” and “our” unless specified otherwise) was formed as a Delaware corporation in 2015, and prior to that, the first CAVA restaurant opened in 2011 in Bethesda, Maryland. The Company is headquartered in Washington, D.C. and, as of October 5, 2025, the Company operated 415 fast-casual CAVA Restaurants in 28 states and Washington, D.C. The Company’s authentic Mediterranean cuisine unites taste and health, with a menu that features chef-curated and customizable bowls and pitas. The Company centrally produces dips, spreads, and certain dressing bases for use in its restaurants while also selling its dips, spreads, and prepared dressings in grocery stores.

Interim Financial Statements—The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles and practices of the United States of America (“GAAP”) for interim financial information. Certain information and footnote disclosures normally included in annual financial statements presented in accordance with GAAP have been omitted pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included.

The unaudited interim financial information should be read in conjunction with the audited consolidated financial statements included in the Company’s annual report on Form 10-K for the fiscal year ended December 29, 2024. Interim results of operations are not necessarily indicative of the results that may be achieved for the full year.

Recently Adopted Accounting Standards—In November 2023, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure through enhanced disclosures about significant segment expenses. The Company adopted the guidance beginning with its consolidated financial statements for the fiscal year ended December 29, 2024, which includes additional segment expense disclosures, among other items.

Recently Issued Accounting Standards—In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which improves income tax disclosures through enhanced disaggregation within the rate reconciliation table and disaggregation of income taxes paid by jurisdiction. The amendment is effective for fiscal years beginning after December 15, 2024 (the Company’s fiscal 2025) and early adoption is permitted. The amendment should be applied on a prospective basis; however, retrospective application is permitted. The Company is currently evaluating the impact of adopting this ASU on its disclosures; however, we do not anticipate a significant impact to our financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40), which requires disaggregation, in tabular presentation, of certain income statement expenses into different categories, such as purchases of inventory, employee compensation, and depreciation. The FASB issued an update in January 2025, ASU 2025-01, which clarifies the effective date of ASU 2024-03. The amendment is effective for fiscal years beginning after December 15, 2026 (the Company’s fiscal 2027), with early adoption permitted, and may be applied on a retrospective basis. The Company is currently evaluating the impact of adopting this ASU on its financial statements and disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting guidance for costs incurred to develop or obtain internal-use software. The amendment aligns capitalization criteria with current development practices and eliminates separate guidance for website development costs. Under the new standard, capitalization of eligible costs begins when (i) management authorizes and commits to funding the project and (ii) it is probable that the project will be completed and the software will be used as intended. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027 (the Company’s fiscal 2028), and may be applied prospectively, on a modified basis for in-process projects, or retrospectively. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

The Company reviewed all other recently issued accounting standards and determined they were either not applicable or not expected to have a material impact on the Company’s financial position or results from operations.

2. REVENUE

The Company’s revenue was as follows:

Revenue from the redemption of the Company’s gift cards and loyalty program is included in restaurant revenue. Revenue recognized from the redemption of gift cards, included in the gift card liability at the beginning of the year, was$0.4 million and $0.3 million during thetwelve weeks ended October 5, 2025 and October 6, 2024, respectively. Revenue recognized from the redemption of gift cards, included in the gift card liability at the beginning of the year, was$2.2 million and $1.5 million during theforty weeks ended October 5, 2025 and October 6, 2024, respectively.

Changes in the CAVA Rewards liability, which is included in accrued expenses and other on the accompanying consolidated balance sheets, were as follows:

3. INVESTMENTS

Fixed income debt securities

The Company launched an investment portfolio consisting of fixed income debt securities in the current year, which was funded with cash and cash equivalents on hand. These investments, which may be sold prior to their contractual maturity, are designated as available-for-sale and are carried at fair value. The difference between amortized cost, net of any credit loss allowances, and fair value is reflected as a component of accumulated other comprehensive income, net of tax. Fixed income debt securities are presented within investments at fair value on the accompanying unaudited condensed consolidated balance sheet.

Note Receivable

During the forty weeks ended October 5, 2025, the Company made a $5.0 million investment in a convertible promissory note of Hyphen Technologies, Inc. (the “Note Receivable”), which develops and provides automated makelines designed to improve the speed and efficiency of food production. The Company intends to test this technology in its digital business. The Company is committed to make an additional investment of $5.0 million upon the achievement of a predefined milestone event. This contingent investment will be made in the form of a convertible promissory note at terms that are substantially similar to the Note Receivable. The Note Receivable is presented within other long-term assets on the accompanying unaudited condensed consolidated balance sheet. Refer to Note 4 (Fair Value) for more information.

The Company’s investments were as follows:

In determining credit losses on its investments in an unrealized loss position, the Company considers certain factors that may include, among others, severity of the unrealized loss, security type, industry sector, credit rating, yield to maturity, profitability, and stock performance. Based on the Company’s review of its investments in an unrealized loss position, it determined that the losses were due to non-credit factors and, therefore, it does not consider these securities to be credit impaired at October 5, 2025. As of October 5, 2025, the Company did not intend to sell any investments in an unrealized loss position, and it is not more likely than not that the Company will be required to sell any investments before recovery of their amortized cost basis.

Investments in fixed income debt securities by contractual maturities were as follows:

4. FAIR VALUE

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement accounting guidance creates a fair value hierarchy to prioritize the inputs used to measure value into three categories. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input significant to the fair value measurement, where Level 1 is the highest category and Level 3 is the lowest category. The three levels are defined as follows:

•Level 1—Quoted prices for identical instruments in active markets.

•Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant value drivers are observable.

•Level 3—Unobservable inputs for the asset or liability. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.

Due to their short-term nature, the carrying value of the Company’s cash and cash equivalents, including money market securities, accounts receivable, and accounts payable approximates fair value.

Assets Measured at Fair Value on a Recurring Basis

Fixed income debt securities

The fair values of fixed income debt securities were based on the market values obtained from an independent asset management service. The asset management service utilizes the market approach in determining the fair values of the investments held by the Company. Typical inputs and assumptions to pricing models used to value the Company’s investments in fixed income debt securities include, but are not limited to, benchmark yields, reported trades, broker-dealer quotes, credit spreads, credit ratings, bond insurance (if applicable), benchmark securities, bids, offers, reference data, and industry and economic events. For asset backed securities, inputs and assumptions may also include the structure of issuance, characteristics of the issuer, collateral attributes, and prepayment speeds.

Note Receivable

The Company has elected to account for the Note Receivable described in Note 3 (Investments) under the fair value option. As a result, the embedded conversion feature, which would otherwise require bifurcation, is not accounted for separately. The fair value of the Note Receivable is determined under a market approach utilizing Level 3 inputs such as estimates of the equity value of the underlying business, volatility, and a probability-weighted expected time to exit.

The fair value of the Company’s assets that are measured on a recurring basis was as follows:

Assets Measured at Fair Value on a Non-recurring Basis—Assets recognized or disclosed at fair value in the accompanying unaudited condensed consolidated financial statements on a nonrecurring basis may include items such as property and equipment, net, operating lease assets, goodwill, and intangible assets. These assets are measured at fair value whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the forty weeks ended October 5, 2025 and October 6, 2024, nonrecurring fair value measurements resulting in asset impairments were not material.

5. SUPPLEMENTAL BALANCE SHEET INFORMATION

Property and equipment, net

The Company’s property and equipment, net, were as follows:

Construction in progress includes CAVA new restaurant openings and technology improvements.

Intangible assets, net

The increase in intangible assets, net, during the forty weeks ended October 5, 2025, was due tothree favorable lease assets recognized in connection with an asset acquisition supporting the Company’s new restaurant openings.

Accrued expenses and other

The Company’s accrued expenses and other were as follows:

6. DEBT

As of October 5, 2025, the Company had a revolving credit facility with available borrowing capacity of $74.1 million, net of $0.9 million of outstanding letters of credit (the “2022 Credit Facility”), with JPMorgan Chase Bank, N.A. as administrative agent. The 2022 Credit Facility has afive-year term and matures on March 11, 2027. Interest rates on loans under the 2022 Credit Facility are based on either: (i) the base rate plus applicable margin ranging from 0.50% to 1.50% or (ii) the Adjusted Term Secured Overnight Financing Rate (as described in the 2022 Credit Facility) plus applicable margin ranging from 1.50% to 2.50%. Applicable margin ranges are subject to change based on the Company’s Total Rent Adjusted Net Leverage Ratio (as defined in the 2022 Credit Facility). The Company is also required to pay a commitment fee for unused amounts under the 2022 Credit Facility, which ranges from 0.20% to 0.35% based on the Total Rent Adjusted Net Leverage Ratio. The 2022 Credit Facility is unconditionally guaranteed by certain of the Company’s domestic restricted subsidiaries and is secured, subject to permitted liens and other exceptions, by a first-priority security interest in and pledge of certain assets of the borrower and the guarantors. The 2022 Credit Facility includes customary restrictive covenants and covenants that require compliance with certain leverage ratios. As of October 5, 2025, the Company was in compliance with these financial and other covenants, and the Company hadno borrowings under the 2022 Credit Facility.

7. INCOME TAXES

Income taxes for the twelve and forty weeks ended October 5, 2025 have been included in the accompanying unaudited condensed consolidated financial statements on the basis of an estimated annual effective tax rate. In addition to the amount of tax resulting from applying the estimated annual effective tax rate to pre-tax income, the Company includes, when appropriate, certain items treated as discrete events to arrive at an estimated overall tax amount. The effective income tax rate for the twelve weeks ended October 5, 2025 was 28.6%. The effective income tax rate for the forty weeks ended October 5, 2025 was 9.1% due to a $12.6 million reduction to income tax expense associated with equity-based compensation. The effective tax rate for the twelve and forty weeks ended October 6, 2024 was (0.3)% and 0.9%, respectively, as the amount of income tax expense was immaterial prior to the Company’s release of its valuation allowance against deferred tax assets in the fourth quarter of fiscal 2024.

On July 4, 2025, the United States Congress enacted H.R.1, commonly referred to as the One Big Beautiful Bill Act (“The Act”), introducing significant amendments to the U.S tax legislation, including extensions and modifications to provisions of the Tax Cuts and Jobs Act. The Act contains multiple effective dates, with certain provisions applicable beginning in 2025 and others phased in over subsequent years. The Company expects future increases in deferred tax liabilities related to property and equipment associated with the reinstatement of 100% bonus depreciation but does not expect a material impact to the estimated annual effective tax rate. The Company will continue to monitor future administrative guidance and regulatory developments that may clarify the application of The Act’s provisions.

8. LEASES

The Company leases all of its CAVA Restaurants, its digital kitchens, its production facility in Laurel, Maryland, its collaboration center in Washington, D.C., its support centers in Brooklyn, New York and Plano, Texas, and its food distribution center in Edison, New Jersey. The Company determines if a contract contains a lease at inception and determines the classification of a lease, if necessary. Typically, restaurant leases have initial terms of 10 years and include five-year renewal options.

Supplemental disclosures of cash flow information related to leases were as follows:

9. COMMITMENTS AND CONTINGENCIES

Purchase Obligations—The Company enters into various purchase obligations in the ordinary course of business, generally of a short-term nature. Those that are binding primarily relate to amounts owed for produce and other ingredients and supplies, including supplies and materials used for new restaurant openings.

Letters of Credit—As of October 5, 2025 and December 29, 2024, the Company hadsix andfour irrevocable letters of credit in favor of various landlords in the aggregate amount of $0.9 million and $0.7 million, respectively. The letters of credit do not require a compensating balance and automatically renew in accordance with the terms of the underlying lease agreement.

Litigation—The Company is currently involved in various claims and legal actions that arise in the ordinary course of its business, including claims resulting from employment related matters. While the ultimate outcome and the costs associated with litigation are inherently uncertain and difficult to predict, as of the date hereof, the Company does not believe that any of its pending legal proceedings, most of which are covered by insurance, will have a material effect on the Company’s business, financial condition, results of operations, or cash flows. However, a significant increase in the number of these claims or an increase in uninsured amounts owed under successful claims could materially and adversely affect the Company’s business, financial condition, results of operations, or cash flows.

Investments—Refer to Note 3 (Investments) for information regarding the Company’s commitment related to an investment in a convertible promissory note.

10. EQUITY-BASED COMPENSATION

The Company recognized equity-based compensation expense (including applicable payroll taxes) of $3.3 million and $14.5 million during the twelve and forty weeks ended October 5, 2025, and $3.5 million and $12.2 million during the twelve and forty weeks ended October 6, 2024, respectively, related to its equity incentive plans and employee stock purchase plan, recorded within general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.

A summary of the Company’s stock option activity is as follows:

As of October 5, 2025, unrecognized compensation expense related to option awards was $10.0 million, which is expected to be recognized over a weighted-average period of 2.7 years.

A summary of the Company’s restricted stock unit (“RSU”) activity is as follows:

As of October 5, 2025, unrecognized compensation expense related to RSU awards was $21.6 million, which is expected to be recognized over a weighted-average period of 2.6 years.

11. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net income by the weighted average shares outstanding during the period. Diluted earnings per share is calculated by adjusting the weighted average shares outstanding for the dilutive effect of outstanding equity awards for the period using the treasury-stock method.

The following table sets forth the computation of earnings per common share:

The following equity awards were excluded from the calculation of diluted earnings per share:

12. SEGMENT REPORTING

The Company’s operations are conducted astwo operating segments: CAVA and CAVA Foods. CAVA includes the operations of all company-owned CAVA restaurants. CAVA Foods includes the production of dips, spreads, and certain dressing bases used in CAVA restaurants as well as sales from the Company’s consumer-packaged goods (“CPG”) business. These segments were determined on the same basis that the Company’s Chief Executive Officer (“CEO”), who is the chief operating decision maker (“CODM”), manages, evaluates, and makes key decisions regarding the business. CAVA is the Company’s only reportable segment, as CAVA Foods is below the quantitative thresholds for segment reporting purposes.

The CODM reviews segment performance and allocates resources based upon restaurant-level profit, which is defined as segment revenues less food, beverage, and packaging, labor, occupancy, and other operating expenses. Restaurant-level profit is used to measure the segment’s profitability as corporate-level expenses are excluded from such measure. The CODM uses restaurant-level profit for each segment in the annual budget to make decisions about the allocation of resources, with the monitoring of actual results to determine appropriate changes to such allocation. All segment revenue is earned in the United States, and all intersegment revenues have been eliminated. Intersegment revenues represent the sale, from CAVA Foods to CAVA, of dips, spreads, and certain dressing bases used in CAVA restaurants. Sales from external customers are derived principally from sales of food, beverage, and CPG. The Company does not rely on any major customers as sources of sales. As the CODM does not review asset information by segment, assets are reported only on a consolidated basis. Other includes the CAVA Foods CPG business.

The following table presents financial information about the Company’s reportable segment and includes reconciliations of CAVA segment revenue and restaurant-level profit to the Company’s consolidated revenue and income before taxes:

1 Other operating expenses includes all other restaurant-level operating expenses, such as kitchen supplies, utilities, repairs and maintenance, travel costs, credit card and bank fees, recruiting, third-party delivery service fees, and marketing expenses.