With IPO capital in hand, Cava looks onward to growth

The 263-unit Mediterranean chain plans to reach 1,000 units across the U.S. by 2032, and sees opportunities to grow sales with new formats, catering and building loyalty.
Cava IPO New York Stock Exchange
Cava's team rang the opening bell for its debut on the New York Stock Exchange Thursday.|Photo: Shutterstock.

With a strong public market debut and an opening-day stock pop under its belt, Cava Group Inc. is well-positioned to execute its plan for growth.

Cava went into its IPO Thursday with an initial stock price of $22 per share, raising $318 million, but opened on the New York Stock Exchange at $42 per share. The stock price ended the day at $43.78, up 99%, giving Cava a valuation of close to $4.9 billion.

After ringing the opening bell with the Cava team at the NYSE, CFO Tricia Tolivar outlined the opportunities for the Mediterranean brand. It was founded as the fast-casual spinoff of the full-service Greek-inspired restaurant Cava Mezze opened in 2006 in Rockville, Md., and has grown to 263 units at the end of the first quarter this year.

Cava has carved out a strong foothold as the leading Mediterranean concept in the fast-casual segment. With no real hummus-slinging competitors of size, Cava is hoping to steal market share from Chipotle and Sweetgreen with its similar build-a-bowl (or pita sandwich) menu.

Really, the more than 3,000-unit Chipotle is more the competitive target, Tolivar said. About 79% of Cava units are within a mile of Chipotle (and only 20% of Cava units are near a Sweetgreen), and the Mediterranean chain’s per person average is between $13-$14, which is on par with a Chipotle entrée with guac.

And Cava is a formidable contender. According to traffic research firm Placer.ai, Cava has been outperforming the fast-casual segment in terms of visits-per-venue.

Cava’s monthly visits-per-venue year over year have been up since January, which Placer.ai notes is impressive in light of the chain’s continued expansion, indicating that new units are driving traffic despite the current economic environment.

In May, for example, Cava’s visits-per-venue were up 4.1% while visits within the fast-casual segment more broadly were down 5.5%.

Here’s where Tolivar sees opportunity for growth for the Cava brand:

Domestic unit growth is projected to reach 1,000 by 2032

Cava had 72 restaurants at the end of 2018 when the company made the bold strategic move of acquiring the Zoes Kitchen chain in a $300 million deal that was funded largely by former Panera Bread CEO Ron Shaich’s Act III Holdings, bringing about 145 locations into the fold.

Cava began converting 125 of those restaurants to the primary brand in 2020, starting with eight that year, and then rapidly accelerating, with 54 converted in 2021 and 63 in 2022.

Only eight conversions remain, but the company is also opening organic new units. Cava expects to add 34 to 44 new restaurants before the end of 2023, including those eight conversions.

In 22 states now, and Cava officials see the potential to reach 1,000 units across the U.S. by 2032, filling in existing markets throughout the “coastal smile” from the D.C. area through the Sun Belt to California, but also moving into new territories, like the Midwest.

New formats

Cava does well in a variety of settings, from suburban end-caps and college-adjacent locations to urban free-standing restaurants with pick-up lanes. The chain is testing 10 restaurants that are all digital, with no dine-in ordering. These units are devoted to catering, delivery and digital order pick-up.

Having a separate production facility for those channels frees up staff in restaurants with dine-in, Tolivar said. And though catering only accounts for a very small percentage of sales now, Cava would like to build that revenue stream.

“We know that catering could be a good portion of the business,” she said. “But we also don’t want it to be distracting to our existing business in the restaurants themselves. So we’re testing this opportunity to see if it really provides centralized kitchen production so we could serve a market that’s currently not met, and we’ll continue to evaluate and explore it.”

Drive-thru is also an opportunity for Cava. Only about 20 restaurants now have drive-thru pick-up capabilities, but the company expects “a significant portion” of new restaurants to allow guests to pick up their digital orders without leaving the car.

Tolivar, however, said the company plans to be thoughtful about drive-thrus, noting that 65% of sales are dine-in orders.


At the end of the April-ended first quarter, Cava had 3.7 million loyalty members, which is significantly less than Chipotle’s 33 million, but offers plenty of room to grow.

Cava’s loyalty members represented about 25% of sales in the first quarter. As many chains are doing, Cava plans to adopt a more tailored approach to loyalty, offering unique digital content, merchandise and menu exclusives.

Consumer packaged goods

Early on, Cava developed a line of CPG sauces and spreads available at retail stores, including the chain’s signature Crazy Feta—whipped with jalapeno, onion and olive oil—as well as harissa, hummus, roasted eggplant dip and tzatziki. The products are available in more than 650 retail outlets across the country, including Whole Foods Markets.

The company operates a production facility in Maryland, and a second facility is scheduled to open early next year. That will allow the brand to build on CPG, which now only account for about 1% of sales. The production centers also make sauces and spreads for the growing number of Cava restaurants, ensuring consistency and quality, Tolivar said.

This way, for example, Cava can provide tzatziki that’s made with fresh cucumber and dill, not freeze-dried ingredients, she said. “That’s not acceptable in our restaurants.”

Efficiency, but no robots (yet)

Both Chipotle and Sweetgreen have been investing heavily in various forms of automation, from tortilla-chip-frying robots to fully automated makelines. Cava, on the other hand, is not so enamored with automation.

“We have looked at automation,” Tolivar said. “We believe in certain areas the cost is still too high to generate the returns we’re looking for.”

Where Cava does see opportunity are investments that might make things easier for team members. The company is looking at technology tools that might help more accurately estimate how much chicken to grill and when, for example.

The chain is also looking for operational tweaks to create efficiencies for workers. For example, Cava restaurants use a lot of pickled onions and historically those onions would be sliced in restaurants, which was labor intensive. So the company partnered with a supplier, which now delivers the onions pre-sliced. Those onions are still pickled in-house, she said, but the move has alleviated some stress on workers

Cava, of course, has yet to make a profit, though Tolivar said the chain is well on the path to profitability. In the first quarter, the net loss of $2 million was a significant improvement over the year-ago loss of $20 million.

Even before the IPO, Cava’s unit economics were strong, she said.

“Our restaurant level profits are strong and growing, as so as we continue to open more and more restaurants, that will continue to expand,” said Tolivar. “In the full year last year, we had a 20.3% restaurant level margin, and in the first quarter, delivered over 25% restaurant level margin. And that, coupled with investments we’ve made in our infrastructure already—so we’ve made robust investments in technology, people from a real estate, design and construction standpoint, our people and culture teams, our operations teams—really to make sure that we could sustain the growth we’ve been doing, but then the growth for the future.”

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