Company: CAVA
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0001628280-25-007882
Chunk: 246

Company: CAVA GROUP, INC.
Filing Date: 2025-02-26
Form: 10-K
Item: Item 8
Chunk 246
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 for those products. Transfer of control occurs at a point in time, typically upon delivery as this is when title and risk of loss passes to the customer. Allowances for sales returns, stale products, and discounts are recorded as reductions to CPG revenue. The Company uses judgment in estimating sales returns, considering numerous factors such as historical sales return rates. Gift Cards—Revenue related to the sale of gift cards is deferred until the gift card is redeemed. Deferred gift card revenue is included in accrued expenses and other in the accompanying consolidated balance sheets. Gift cards do not carry an expiration date; therefore, customers can redeem their gift cards for products indefinitely and the Company does not deduct non-usage fees from outstanding gift card balances. A portion of gift cards that are not expected to be redeemed exclusive of amounts that are subject to state unclaimed property laws are recognized as breakage over time in proportion to gift card redemptions. Revenue recognized from gift card breakage was immaterial in fiscal 2024, 2023, and 2022.Loyalty Program—On October 7, 2024, the Company launched its reimagined CAVA Rewards loyalty program with the goal of developing personal relationships with guests as the Company scales its business. CAVA Rewards members generally earn points for every dollar spent. Points can be redeemed for various rewards, which consist of free food and beverage items. Points expire if an account is inactive for a period of 180 days, and earned rewards converted from points expire 60 days after they are issued.  The Company records a liability and a corresponding reduction in revenue in periods when loyalty program rewards are earned by members. The Company recognizes revenue and a corresponding reduction to the liability in periods when loyalty program rewards are redeemed by members. The amount of revenue recognized or deferred is based on the stand-alone selling price of the loyalty points multiplied by an estimated redemption rate. The Company determines the stand-alone selling price of loyalty points based on the estimated value of the products for which a reward is expected to be redeemed.

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Advertising and Marketing Costs—Advertising and marketing costs are expensed as incurred. Advertising and marketing costs totaled $8.8 million, $6.1 million, and $7.1 million during fiscal 2024, 2023, and 2022, respectively, and are distributed among general and administrative expenses, other operating expenses, and pre-opening costs in the accompanying consolidated statements of operations.Restructuring and Other Costs—Restructuring and other costs consist mainly of expenses related to our Zoes