Those looking for a great success story in the chain restaurant world should look no further than Cava.
The Washington, D.C.-based fast-casual chain is the winner of this year’s Pacesetter Award, which honors concepts that have moved from up-and-coming brand status to become category leaders. The 309-unit chain was celebrated at the annual Restaurant Leadership Conference in Phoenix on Sunday, hosted by Restaurant Business and parent company Informa.
Known for its healthful, Mediterranean-flavored menu, Cava has carved out a sweet spot within the “cultural cuisine” category, as CEO and co-founder Brett Schulman likes to say.
It was a landmark year for Cava Group Inc. in 2023, the chain’s first year as a public company after a successful initial public offering in June that nearly doubled its stock price on opening day.
At the time, the company was reporting negative numbers. But by the end of the year, Cava recorded net income of $13.3 million, compared with a loss of $59 million the prior year. Same-store sales were up an enviable 18%—including traffic growth of more than 10%—on revenues that grew by nearly 60% to $717.1 million.
Cava’s market cap is now close to $8 billion, with units averaging $2.6 million in sales. And, with sights set on reaching 1,000 units by 2032, Cava is now settling into what Schulman expects will be more “normalized” same-store sales growth of 3% to 5% this year—lapping a strong year—as the IPO halo dims.
How Cava got here is the result of a series of investments that paid off.
The concept was born as the fast-casual spinoff of a full-service restaurant called Cava Mezze, which opened in Rockville, Maryland in 2006.
The Greek-inspired restaurant became known for its sauces, dips and spreads, like the spicy Crazy Feta, hummus and tzatziki, and co-founders Ike Grigoropoulos, Dimitri Moshovitis and Ted Xenohristos brought in Schulman to help build the CPG business.
And so he did. But Schulman also saw another opportunity with a fast-casual brand and the partners launched Cava in 2010, tapping into growing demand for fresh, healthful cuisine, with bold flavors and a familiar walk-the-line service format to build a bowl or pita.
Early on, the company built a production facility for the condiment line—now available in retail stores across the country—and that vertical integration helped smooth the path for restaurant expansion. The company opened a second manufacturing facility last year and now the two can support up to 750 restaurants, in addition to the CPG business.
Another hugely beneficial strategic move came in 2018, when Cava had just 72 units. The company partnered with former Panera Bread CEO Ron Shaich’s Act III Holdings to acquire the Zoes Kitchen chain in a $300 million deal. The move brought 145 units into the fold, which were slowly converted to Cava.
Now no other fast-casual Mediterranean brand comes close in terms of footprint, and Cava has surpassed healthy fast-casual rival Sweetgreen (221) in unit count, though it has a long way to go to catch Chipotle’s 3,400 units. Cava expects to open between 48 to 52 new restaurants this year, where Chipotle expects to add 285 to 315.
Cava has also evolved into a multi-channel business, with about 36% of sales coming from digital and delivery orders. Schulman sees a big opportunity with catering, as well as new restaurant formats, including more drive-thru locations.
The loyalty program will be relaunched later this year after an upgrade. And Cava is testing some restaurant ambiance enhancements to make restaurants more inviting for dine-in guests.
Schulman sees Cava as a brand that can offer both convenience and hospitality, bridging the gap between limited- and full-service dining.
Kelly Costanza, Cava’s chief people officer, accepted the Pacesetter Award on Sunday with Chief Experience Officer Andy Rebhun and Chief Information Office Beth McCormick.
Cava’s “secret sauce” is simple, said Costanza:
“Staying true to who you are; staying true to your brand,” she said. “We really believe in our delicious Mediterranean food.”
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