The company’s recent momentum has come from underpricing the Consumer Price Index and the quick-service category, according to CEO Brett Schulman
CAVA’s industry outperformance continued in the fourth quarter, with a 28.3% increase in revenues — to $225.1 million — driven by net new restaurant openings and same-store sales growth of 21.2%, which included traffic growth of 15.6%.
The company reported fourth quarter results Tuesday after market, which also included a restaurant-level profit margin improvement year-over-year to 22.4% of sales. Also, average unit volumes jumped to $2.9 million in 2024, from $2.6 million the year prior. On the year, the CAVA system ended 2024 with 367 restaurants, marking an 18.8% increase year-over-year.
During the company’s earnings call Tuesday, co-founder and chief executive officer Brett Schulman said the company’s strong performance came from its differentiated Mediterranean cuisine and its value proposition.
“From the end of 2019 to end of 2024, we had a price increase of about 15%. The (Consumer Price Index) was about 23%, so we underpriced by about 8 points. The QSR category was in the mid-30s, so we were not even half of that price increase, which has amplified our value proposition,” he said, adding that the company’s 2025 expected pricing increase will be about 1.7%, which “is still under the expected CPI and what we’ve seen our peers take.”
Also, Schulman said several times that value is about more than pricing and CAVA also offers convenience, a unique culinary position, and “a human connection,” as 64% of its guests are dine in.
“All of that comes together and we’re really capturing the bang for the buck, whether (customers) are trading down from legacy casual dining or trading up from traditional QSR for a dollar or two more or sometimes at parity, or they’re trading over (from other fast casual concepts), where we’re resonating with the modern consumer,” Schulman said.
The majority dine-in mix is why CAVA is continuing to focus on its Project Soul initiative, which includes softer seating, more greenery, and an inviting brand palette. As Schulman recently noted, “The demise of the dining room is greatly exaggerated.”
That said, don’t expect kiosks to welcome those dine-in guests anytime soon.
“We believe in human interaction. If they want that (kiosk) experience, they can download our app,” Schulman said.
CAVA, however, is embracing other tech solutions, including its kitchen display system, which is currently live in about 25 restaurants and is forecasted to be live in about 250 restaurants by the end of this year. Schulman said the solution has so far improved accuracy and customer experience and also offers customers insight into their order status.
In 2025, the company will also continue to build on its new labor and deployment model, which is leading to increased productivity across both dayparts.
“Many of our restaurants are high volume restaurants and we’re mindful we don’t want people intimidated by those lines. We’ve seen with the new labor deployment scheduling model incremental improvements in speed and our service scores,” Schulman said.
The company will also continue to enhance its loyalty program and press the gas on menu innovation, with a similar launch cadence to 2024. CAVA’s recent grilled steak launch “exceeded expectations,” while its partnership with Olympic gold medalist Gabby Thomas led to higher sales of the Spicy Lamb and Avocado Bowl.
There is also an upside expected from catering, which is currently going through CAVA’s stage-gate process. Schulman said there is a clear demand for the channel and the company is working through technology and packaging refinements.
Finally, on the development side, the company plans to continue its Midwest expansion following its 2024 Chicago debut with market entry in Detroit and Indianapolis later this year, as well as its first Pittsburgh restaurant. New units are exceeding economic expectations, according to CFO Tricia Tolivar, with year two cash-on-cash returns of at least 40%. In 2025, CAVA anticipates at least 17% net new-unit growth.
CAVA Q4 by the numbers
Revenue grew 28.3% to $225.1 million as compared to $175.5 million in the prior year quarter
Net new CAVA restaurant openings of 15, bringing total CAVA Restaurants to 367, an 18.8% increase year over year
Same-store sales growth of 21.2%
Restaurant-level profit margin of 22.4%
Full-year 2024
Revenue grew 33.1% to $954.3 million as compared to $717.1 million in the prior year
Net new restaurant openings of 58
Same-store sales growth of 13.4%
AUVs of $2.9 million as compared to $2.6 million
Restaurant-level profit margin of 25%
Contact Alicia Kelso at [email protected]
You May Also Like
