CAVA and Papa John's Shares Plummet, What You Need To Know

What Happened?

A number of stocks fell in the afternoon session after a USDA forecast indicated that rising farm production costs could soon impact ingredient prices. 

The U.S. Department of Agriculture's latest forecast projects that total production costs for major crops will continue to rise, potentially reaching record highs. This suggests that restaurant operators may not see relief from elevated expenses in the near future. Key drivers for this increase include significantly higher costs for fuel, lube, electricity, and fertilizer, with some fertilizer cost estimates revised up by as much as 13%. For pizza chains, which rely on agricultural products like wheat, tomatoes, and dairy, these rising input costs could translate directly into higher food expenses, putting pressure on their profit margins.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Modern Fast Food company CAVA (NYSE:CAVA) fell 7.9%. Is now the time to buy CAVA? Access our full analysis report here, it’s free.
• Traditional Fast Food company Papa John's (NASDAQ:PZZA) fell 5.8%. Is now the time to buy Papa John's? Access our full analysis report here, it’s free.

Zooming In On CAVA (CAVA)

CAVA’s shares are very volatile and have had 25 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 10 days ago when the stock gained 2.6% on the news that the company raised its new restaurant opening target for fiscal 2026, signaling confidence in its expansion plans. 

CAVA now expects to open 75-77 net new restaurants during the fiscal year, an increase from its previous forecast of 74-76. This update reflects the strong early performance of its newly opened locations. During the first quarter of fiscal 2026, the company opened 20 net new restaurants, expanding its footprint to 459 locations. The decision to lift the opening target suggests management is optimistic about its development pipeline and long-term growth opportunities.

CAVA is up 34.2% since the beginning of the year, but at $81.26 per share, it is still trading 16.6% below its 52-week high of $97.39 from April 2026. Investors who bought $1,000 worth of CAVA’s shares at the IPO in June 2023 would now be looking at an investment worth $1,856.

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