CAVA Group (CAVA) risk factors, FY2024 10-K

Risks Related to Our Business and Our Industry

1. 01We operate in a highly competitive industry
2. 02Our future growth depends on our ability to open new restaurants while managing our growth effectively and maintaining our culture, and our historical growth may not be indicative of our future growth
3. 03We may not be able to successfully identify appropriate locations and develop and expand our operations in existing and new markets
4. 04New restaurants may not be profitable, and may negatively affect sales at our existing locations
5. 05Negative changes in guest perception of our brand could negatively impact our business
6. 06Our efforts to market our restaurants and brand may not be successful
7. 07Food safety issues and food-borne illness concerns may harm our business
8. 08Lastly, the occurrence of food-borne illnesses or food safety issues could result in a temporary supply disruption and adversely affect the price and availability of affected ingredients
9. 09If we are unable to maintain or increase prices, our margins may decrease
10. 10The growth of our business depends on our ability to accurately predict guest trends and demand and successfully introduce new menu offerings and improve our existing menu offerings
11. 11We are subject to risks associated with leasing property
12. 12We may not be able to successfully expand our digital and delivery business, which is subject to risks outside of our control
13. 13Our inability or failure to utilize, recognize, respond to, and effectively manage the immediacy of social media could have a material adverse effect on our business
14. 14We have a history of losses and, especially if we continue to grow at an accelerated rate, we may not maintain profitability in the future
15. 15We may not realize the anticipated benefits from past and potential future acquisitions, investments or other strategic initiatives

Risks Related to Our Manufacturing and Supply Chain

1. 16We may not be able to manage our manufacturing and supply chain effectively, which may adversely affect our results of operations
2. 17Our reliance on third parties could have an adverse effect on our business, financial condition, and results of operations
3. 18We may not successfully optimize, operate, and manage our production facilities
4. 19We may experience shortages, delays, or interruptions in the delivery of food items and other products
5. 20We may face increases in food, commodity, energy, and other costs

Risks Related to Our People and Culture

1. 21We may face increases in labor costs, labor shortages, and difficulties in identifying, hiring, training, motivating, and retaining the right Team Members
2. 22Our success depends on our ability to attract, develop, and retain our management team and key Team Members

Risks Related to Information Technology Systems, Cybersecurity, Data Privacy, and Intellectual Property

1. 23Security breaches of our electronic processing of credit and debit card transactions, the CAVA app, or confidential guest or Team Member information (including personal information) may adversely affect our business
2. 24Our business is subject to complex and evolving laws and regulations regarding privacy, data protection, and cybersecurity
3. 25We may not be able to adequately protect or enforce our rights in our intellectual property
4. 26We have been, and may in the future be, subject to claims that we violated certain third-party intellectual property rights
5. 27We rely heavily on information technology systems and failures, or interruptions in, or not effectively scaling and adapting, our information technology systems could harm our business
6. 28resulting from the failure of such infrastructure. Remediation of such problems could result in significant, unplanned capital investments and harm our business, financial condition, and results of operations
7. 29The use or capabilities of artificial intelligence in our offerings may result in reputational harm and liability
8. 30Our business operations and our ability to acquire, retain, and serve our guests are highly dependent upon the reliable performance of our website and the CAVA app and the underlying network and server infrastructure

Risks Related to Legal and Governmental Regulation

1. 31Changes by the U.S. government could materially affect our business, financial condition, and results of operations
2. 32We are subject to extensive laws and regulatory requirements, and failure to comply with, or changes in, these laws or regulations could have an adverse impact on our business
3. 33All of these regulations impose obligations on us, and any increase in our obligations thereunder could increase our costs of doing business and require us to make changes to our business model
4. 34We are subject to various claims and legal actions that could distract management, increase our expenses, or subject us to monetary damages or other remedies
5. 35If tax laws change or we experience adverse outcomes resulting from examination of our tax returns or disagreements with taxing authorities, it could adversely affect our business, financial condition, and results of operations
6. 36Our ability to use our net operating loss carryforwards may be limited
7. 37Economic factors and guest behavior trends, which are uncertain and largely beyond our control, may adversely affect guests’ behavior and our ability to maintain or increase sales at our restaurants
8. 38We are subject to evolving rules and regulations with respect to ESG matters
9. 39Climate change and volatile adverse weather conditions could adversely affect our restaurant sales or results of operations
10. 40Our inability or failure to execute a comprehensive business continuity plan for our Collaboration Center Organization following a disaster or force majeure event could have a material adverse impact on our business
11. 41The failure of any bank in which we deposit our funds could have an adverse effect on our financial condition
12. 42Our quarterly financial results may fluctuate significantly, including due to factors that are not in our control

Risks Related to Our Indebtedness

1. 43As of December 29, 2024, we had no outstanding indebtedness, and $74.3 million of undrawn availability, under our 2022 Credit Facility (as defined below)
2. 44Our 2022 Credit Facility contains restrictions on our ability to operate our business and to pursue our business strategies
3. 45Our failure to comply with the 2022 Credit Facility, including as a result of events beyond our control, could result in an event of default that could materially adversely affect our business, financial condition, and results of operations

Risks Related to Our Common Stock

1. 46Failure to comply with requirements to design, implement and maintain effective internal controls could have a material adverse effect on our business and stock price
2. 47to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements, and harm our results of operations
3. 48An active, liquid trading market for shares of our common stock may not be sustained, which may make it difficult to sell the shares of common stock you purchase
4. 49Our stock price may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares of our common stock at or above the price you paid or at all, and you could lose all or part of your investment as a result
5. 50Your percentage ownership in our company may be diluted by future issuances of our common stock, which could reduce your influence over matters on which stockholders vote
6. 51stockholders vote, and, in the case of issuances of preferred stock, would likely result in your interest in us being subject to the prior rights of holders of that preferred stock, if any
7. 52Because we have no current plans to pay cash dividends on our common stock, you may not receive any return on investment unless you sell your shares of common stock for a price greater than that which you paid for it
8. 53Future sales, or the perception of future sales, by us or our existing stockholders could cause the market price for our common stock to decline
9. 54If securities analysts do not publish research or reports about our business or if they downgrade our stock or our sector, our stock price and trading volume could decline
10. 55Anti-takeover provisions in our organizational documents and under Delaware law could delay or prevent a change of control
11. 56Our Board of Directors is authorized to issue and designate shares of our preferred stock in additional series without stockholder approval