New Cables can stretch, and the pads naturally wear thinner over time. Both situations require a minor cable adjustment.



 


First, loosen the lock ring by unscrewing it so there is a slight gap between it and the actual lever mount.


Then, unscrew the adjustment barrel a turn or so. This has the effect of lengthening the cable housing and pulling on the cable a bit.


Test by squeezing the lever, then lifting the tire off the ground and spinning it. Ideally, you should be able to adjust it so the lever won't reach the handlebar grip when pulled hard, yet the wheel spins freely without resistance when the brake is released.


When you find the proper adjustment, re-tighten the lock ring to hold the barrel in this new position.


Here is a great article about how to adjust mechanical disc brakes:


Avid brake adjustment and Maintnenance


Finally, here are a few additional pictures for reference (you can take up more cable slack at the caliper itself):