CAVA Group, Inc. (CAVA) “Just Costs Too Much,” Says Jim Cramer

We recently published Jim Cramer Said Quantum Computing Could Quench AI’s Thirst For Water As He Discussed These 14 Stocks . CAVA Group, Inc. (NYSE:CAVA) is one of the stocks Jim Cramer recently discussed.

CAVA Group, Inc. (NYSE:CAVA)’s shares are among the worst performers on the market as they have lost 40% year-to-date. The stock fell by 16.6% in August after the firm’s second quarter earnings report saw its revenue miss estimates by $5 million, and it slashed its full-year midpoint same-store sales guidance to 5% from an earlier 7%. Cramer remarked that one reason CAVA Group, Inc. (NYSE:CAVA) is suffering because its prices are too high:

“[On recent earnings] Yeah and I do think that when we look at Cava, not mentioned on the call, it’s expensive. You’re talking about 15 smackers versus go and get a smash burger a couple of drinks, a diet coke. Yeah but Chilli’s is ten dollars.

“And Cava, unfortunately is not cheap. It just costs too much for a dinner for a family of five.”

Photo by Syed Ahmad on Unsplash

Later during the day, Cramer commented on CAVA Group, Inc. (NYSE:CAVA)’s pricing in detail:

“Brett Schulman, who’s a very perceptive man, the CEO of CAVA said, ‘We have a fluid… macroeconomic climate.’ He told Restaurant Business, which is an excellent trade publication, that the macro climate was like a fog, a fog that the consumer’s trying to find her way through… He goes on to say, ‘I think the consumer is less firm-footed, less ebullient than they were last year… To me, it’s pretty clear what’s going on. CAVA and Sweetgreen have to lower their prices or give us a couple of much lower-priced dishes if they want to turn things around. For now, they’re pricing themselves out of this American market. I get why they’re reluctant to cut prices. What business wants to lower margins?…

Now of these two problem children, Sweetgreen and CAVA, I think CAVA is in much better shape. It has a better balance sheet. It means CAVA can afford to take its medicine, cut prices to bring the customer back. I think they will do it, which is why, after all this, call me a buyer of CAVA. There’s nothing wrong with taking the medicine…

The problem is, unlike McDonald’s, they’re either maybe too proud or too obtuse, I don’t know, to realize that the consumer’s gotten serious about avoiding high-priced foods, including theirs, even though the food is fresh and good.”

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Disclosure: None. This article is originally published at Insider Monkey.