The deal will be financed through a “significant equity investment” in Cava from Act III Holdings, the financing group created by former Panera Bread CEO Ron Shaich to develop emerging brands. Shaich will serve as chairman of the combined company.
With the takeover, Zoes becomes a private company, with shareholders receiving $12.75 for each of their shares. The combined chains will have 327 units in 24 states.
“As a close observer of the fast-casual restaurant industry, I am thrilled at the prospect of what Cava and Zoes Kitchen can accomplish together,” Shaich said in a statement. “Together these business will create the leading company in one of the most important categories in fast casual today—Mediterranean—with the capabilities to drive extraordinary customer satisfaction and powerful growth.”
Cava CEO Brett Schulman will become head of the combined company.
“Now with the addition of Zoes Kitchen, we will be able to broaden our geographic footprint and meet the needs of even more guests—whether in Bethesda or Birmingham, Plano or Pasadena,” Schulman said in a statement.
The parties expect the merger to close in the fourth quarter of 2018.
Zoes has struggled with sales recently, reporting a same-store sales decline of 2.3% in the first quarter. The chain laid out plans to slow future development and close underperforming units.
Cava, meanwhile, remains a fast-casual juggernaut, raising more than $130 million in funding since its founding in 2011. The chain is known for its advances in technology, from food safety sensors to video learning for new hires and a massive data-gathering operation to tailor the guest experience.