As Zoe’s Kitchen Inc. works toward its acquisition by Cava Group Inc., the fast-casual Mediterranean brand swung to a loss in the third quarter and announced a new delivery platform for much of its system.
Plano, Texas-based Zoe’s in August agreed to be acquired by Washington, D.C.-based Cava Group Inc. in a deal valued at about $300 million. Cava, a privately held company with 66 restaurants, agreed to acquire the publicly held Zoe’s, with 263 units, for $12.75 a share.
The Zoe’s deal will be financed with a significant equity investment in Cava led by Boston-based Act III Holdings, an investment company created by Ron Shaich, founder and former CEO of Panera Bread Co. The companies expect the deal to close in this fourth quarter.
Zoe’s filed Securities and Exchange Commission documents on Tuesday for its third quarter ended Oct. 1, reporting a net loss of $3.9 million, or 20 cents a share, which swung from a profit of $270,000, or one cent a share, in the same period last year. Revenue was up 1.3 percent, to $78.9 million, from $77.9 million in the prior-year quarter.
Same-store sales in the quarter fell 7.6 percent, reflecting an 8.8 percent decline in transactions and mix that was offset by a 1.2 percent increase in price in the period.
Zoe’s has been working this year on delivery initiatives to increase the brand’s transactions and check size, and earlier this week announced a 231-unit rollout with third-party platform DoorDash.
In August, Kevin Miles, Zoe’s CEO and president, told analysts the company at the end of the first quarter had been working with four major third-party vendors in 100 restaurants.
“In addition to third-party services,” Miles said, “we have also initiated a small lunch and dinner delivery test, using in-house labor in two of our restaurants, and we will continue to gain valuable operational insight.”
Catering was being handled with in-house teams at 60 restaurants.
With this week’s DoorDash announcement, Casey Shilling, Zoe’s chief marketing officer, said the focus was on convenience for the customers
“DoorDash’s commitment to operational excellence and brand integrity closely align with the experience we want all of our guests to have,” Shilling said in a statement. Delivery orders can be made online at www.zoeskitchen.com/delivery or through the Zoës Kitchen smartphone application.
At the 231 restaurants now with DoorDash, the companies were offering free delivery on orders of less than $100 through Sunday.
Zoës Kitchen, founded in 1995, has units in 20 states.
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