Company: CAVA
Filing Date: 2025-05-16
Form Type: 10-Q
Source: 0001628280-25-026077
Chunk: 38

Company: CAVA GROUP, INC.
Filing Date: 2025-05-16
Form: 10-Q
Item: Item 8
Chunk 38
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 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 sixteen weeks ended April 20, 2025 was a benefit of 26.3% due to a $10.7 million reduction to income tax expense associated with equity-based compensation. The effective tax rate in the prior year quarter was 1.8% 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.

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:Sixteen Weeks Ended(in thousands)April 20,2025April 21,2024Cash paid for operating lease liabilities$15,910 $14,276 Operating lease assets obtained in exchange for operating lease liabilities38,146 19,531 Derecognition of operating lease assets due to termination or impairment302 109 

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 April 20, 2025 and December 29, 2024, the Company had six and four 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