CAVA participated in the Morgan Stanley Global Consumer & Retail Conference on Wednesday, and CEO Brett Schulman discussed the newly public brand’s future, Zoës Kitchen remodels, growth in the wake of the IPO, and the company’s high same-store sales increases.
In 2018, the growing Mediterranean fast-casual brand CAVA purchased another Mediterranean brand, Zoës Kitchen, and has completed all conversions to CAVA units. At the conference, Schulman said that the main reason CAVA purchased Zoës Kitchen was for its Sunbelt locations and the real-estate opportunity it provided for the brand.
Using the “coastal smile strategy” gave the restaurant a chance to enter new markets using second-generation store formats.
“When the opportunity was brought to us it was a left-hand turn from the traditional growth path we were on,” said Schulman.
At the time, Zoës’ “crown jewels” were Dallas and Houston, markets CAVA was desperately trying to break into.
“We felt that this was real estate that had significant dormant value,” Schulman said.
The conversions are all now done with two-thirds of the portfolio having been converted while the remaining were permanently closed, since the real estate was “B real estate,” according to Schulman.
But CAVA has been growing on its own.
In light of the brand’s extremely successful IPO earlier this year, CAVA has more name recognition, which, along with the brand's financial performance, has allowed it to sign leases more easily than before, according to Tricia Tolivar, chief financial officer.
New restaurant openings have been strong and exceeded expectations, she continued. The current cost of a buildout for CAVA is $1.3 million.
As a part of CAVA’s growth, the chain has created a GM Academy that trains general managers for its new stores. These academies are located within a radius of eight stores and provide certification for future GMs.
Going forward, 75% of GMs will come from internal candidates.
Though the brand is expected to grow, Schulman was careful to point out that the growth will be practiced.
“I think we’re so young in our journey still. History is littered with brands and concepts that have grown too fast,” he said.
Despite demands from customers, CAVA was hesitant to start catering.
To combat that, CAVA is opening several different kinds of units.
The first is a digital kitchen without a serving line designed for pick-up and delivery orders only.
The second is a hybrid kitchen with a serving line, a digital makeline and a 300-square-foot kitchen to support a catering operation as well as catering for nearby stores that may have a smaller kitchen.
Schulman isn’t concerned about CAVA moving forward.
“We think there are massive tailwinds behind our brand,” he said.
He believes that CAVA is making a new brand category and has room to grow, considering Mediterranean food was the most popular cuisine six years in a row, he said.
Though healthful options have grown since the pandemic, Schulman wants the brand to be known as a culinary brand, not a healthful brand. However, he did say that customers shouldn’t turn to Ozempic, they should turn to CAVA for weight loss.
