CAVA has been on a tear since going public last year, with sales and traffic numbers outperforming broader industry trends, driving its share price up over 220%. Such a performance will have plenty of people asking what the company’s secret is and, according to chief executive officer Brett Schulman, it simply comes down to value and hospitality.
During the 2024 Piper Sandler Growth Frontiers Conference Wednesday, Schulman said CAVA is well positioned in the current value environment because it has raised its prices significantly lower than the overall limited-service index in the past couple of years – about 18% versus 30%. But, he added, there’s more to value than pricing.
“I think the value wars are a little bit of a misnomer. I think there is more of a discount price war. Value is where we frame it as a combination of the quality of our food, the relevance of our cuisine … convenience – you can access that cuisine and the experience you have with our brand and we think that’s all coming together to drive the traffic growth we saw last quarter,” he said.
CAVA’s traffic was up nearly 10% in the second quarter, an anomaly as the industry otherwise generated broad-based losses. Out of all the attributes the chain pursues to create value, experience may be the hardest to attain as more consumers seek speed and convenience. Schulman noted, however, that CAVA’s culture is built around hospitality, as 65% of the business is dine-in.
“As technology and automation permeate the frontlines of many concepts in our everyday life, there’s a void that is growing from that lack of human connection and we see it in our restaurants. People crave it,” Schulman said. “… The idea of welcoming everyone, and the human connection we’re able to deliver in our restaurants, we work very hard at that.”
Team members, for instance, are encouraged to give away four meals during every shift, whether to someone who looks like they’re having a bad day, a first-time guest, or a loyal customer. This “random act of kindness,” as Schulman describes it, has led to viral videos on social media, which the chain is leveraging to help build more awareness and deepen its connection with guests.
The company’s recent launch of grilled steak exceeded expectations and Schulman said the company did nothing abnormal from a marketing standpoint except create a “powerful” social media launch that generated millions of social media impressions.
“We work really hard to understand how we want to show up in social channels. It’s a very powerful way to drive great awareness, connectivity, [and] emotional connection with our guests,” he said. “We want to connect with our guests and have cultural relevance, and not talk at our guests as a brand but really experience life with our guests.”
Leveraging social media will be a bigger part of CAVA’s strategy as it aims to grow its footprint to about 1,000 stores by 2032, from its current footprint of about 300 units. Chief financial officer Tricia Tolivar said the brand’s awareness level is about 40% in new markets versus 90% for some competitors, and social media is a good tool to shrink that gap.
“What we also find is in our most mature market, [Washington, D.C.], Maryland, Virginia … brand awareness is at 67%. So, [there’s] still a lot of opportunity for us to continue to grow and build on that over time,” she said, adding that CAVA will likely pull different marketing and media levers as it expands.
Of course, there are also other strategies the chain is leveraging to grow – a new loyalty program launching next month, for instance, as well as catering, its consumer packaged goods business, digital initiatives, etc. That said, despite CAVA’s current performance and strong new unit openings, Schulman makes it a point to note the company will not get ahead of itself.
“Restaurants are really hard to scale, and history is littered with restaurant companies that grew too fast,” he said. “They take a lot of people, training, processes, infrastructure, and we think we have a massive white space opportunity that we are creating what we believe will be the next large-scale cultural cuisine category. We don’t just want to fall down on that opportunity and not fulfill the potential that sits in front of us.”
Contact Alicia Kelso at [email protected]
