CAVA Group, Inc. (CAVA) Cash Flow Statement

The extreme swings in the OCF-to-net-income ratio, including 8.19 in 2025Q4 and 0.38 in 2024Q4, suggest that net income is being distorted by items outside core restaurant cash flows rather than tracking operations consistently. The 2024Q4 figure, where net income of $78.6M far exceeded operating cash flow of $29.9M, warrants further investigation into what non-operating or non-cash gains drove that quarter. Investors should monitor whether conversion stabilizes as the conversion-era distortions fade.

The compression in FCF margin reflects capital expenditures rising to 15.4% of revenue in 2026Q3 while operating cash flow did not keep pace, consistent with an expansion phase that is absorbing cash rather than returning it. Quarterly FCF has oscillated between negative and modestly positive territory, which suggests the business is self-funding its growth but with little cushion. The trajectory points to a cash profile dependent on continued unit openings and productivity holding up.

Capex is predominantly growth-oriented given the company's new-unit build cadence, so the rising intensity in 2026Q3 is consistent with accelerated site development rather than maintenance replacement. Depreciation of $21.3M in the same quarter indicates a meaningful installed asset base that will require ongoing reinvestment over time. The key question for analysts is whether new-unit productivity justifies the elevated capital outlay per site.

The magnitude of these swings relative to net income suggests timing effects in payables and accrued liabilities are material to reported operating cash flow in any single quarter. Because the restaurant model typically generates cash ahead of supplier payments, sustained positive working capital contributions may partly reflect timing rather than durable cash generation. Analysts should evaluate operating cash flow on a trailing basis to separate structural cash earnings from working capital timing.

The absence of dividends and buybacks indicates that all internally generated cash is being retained to fund expansion, which is consistent with a high-growth restaurant platform. This leaves shareholders dependent on future growth translating into per-share value rather than current income. The strategy appears sensible if new-unit returns remain strong, but it also means returns are contingent on execution.