CAVA GROUP, INC.CAVA

CAVA GROUP, INC. Fair Value Disclosure

10-KFiled Feb 25, 20263 min read
FAIR VALUE
Assets Measured at Fair Value on a Recurring Basis
Fixed income debt securities
The fair values of fixed income debt securities were based on the market values obtained from an independent asset management service. The asset management service utilizes the market approach in determining the fair values of the investments held by the Company. Typical inputs and assumptions to pricing models used to value the Company’s investments in fixed income debt securities include, but are not limited to, benchmark yields, reported trades, broker-dealer quotes, credit spreads, credit ratings, bond insurance (if applicable), benchmark securities, bids, offers, reference data, and industry and economic events. For asset backed securities, inputs and assumptions may also include the structure of issuance, characteristics of the issuer, collateral attributes, and prepayment speeds.
Note Receivable
The Company has elected to account for the Note Receivable described in Note 4 (Investments) under the fair value option. As a result, the embedded conversion feature, which would otherwise require bifurcation, is not accounted for separately. The fair value of the Note Receivable is determined under a market approach utilizing Level 3 inputs such as estimates of the equity value of the underlying business, volatility, and a probability-weighted expected time to exit.
The fair value of the Company’s assets that are measured on a recurring basis was as follows:
(in thousands)December 28, 2025
Security Type CategoryLevel 1Level 2Level 3Total
Asset backed$— $13,808 $— $13,808 
Commercial deposits— 3,091 — 3,091 
Commercial paper— 2,307 — 2,307 
Corporate bonds— 64,519 — 64,519 
U.S. government bonds26,387 — — 26,387 
Fixed income debt securities$26,387 $83,725 $— $110,112 
Note Receivable$— $— $5,291 $5,291 
Assets Measured at Fair Value on a Non-recurring Basis
Assets recognized or disclosed at fair value in the accompanying consolidated financial statements on a nonrecurring basis may include items such as property and equipment, net, operating lease assets, goodwill, and intangible assets. These assets are measured at fair value whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
The following table presents impairment charges by reportable segment and asset disposal costs recognized during the fiscal years indicated:
(in thousands)202520242023
Impairment charges
CAVA$1,253 $— $547 
Other— — 745 
Total impairment1,253 — 1,292 
Total asset disposal costs3,672 5,055 3,607 
Total impairment and asset disposal costs$4,925 $5,055 $4,899 
Impairment charges within the CAVA segment relate to certain operating lease assets and property and equipment, net. Impairment charges within Other relate to the Company’s Zoes Kitchen conversion strategy. The fair value of these assets was determined using an income approach (discounted cash flow method), which was measured using Level 3 inputs. Unobservable inputs include the discount rate and projected restaurant revenues and expenses. Asset disposal costs primarily relate to normal course replacement of certain assets in our restaurants in all fiscal years presented, the impact of Hurricane Helene on one of our restaurants in North Carolina in fiscal 2024, and the Zoes Kitchen conversion strategy as described in Note 13 (Segment Reporting) in fiscal 2023.
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Historical Timeline

Fiscal YearFiled
2025Feb 25, 2026Showing above
2024Feb 26, 2025
2023Feb 27, 2024

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

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