CAVA continues to soar after its IPO debut in June. The fast-casual restaurant company reported its fourth-quarter and full-year results Monday, bucking industry trends that have emerged so far this earnings season.
For the quarter ended December 31, CAVA saw its revenue increase 52.5% to $175.5 million, compared to $115.0 million in the year-ago quarter. CAVA ended fiscal 2023 with revenue growth of 59.8% to $717.1 million.
Unlike many of its restaurant industry peers, CAVA reported double-digit same-store sales growth for both the quarter and the full year. For T4, excluding 53rd During the week of 2023, same-store sales increased by 11.4% while full-year results increased by 17.9%.
CAVA’s same-store sales growth for the fourth quarter includes 6.2% from customer traffic and 5.2% from menu prices.
Washington, D.C.-based CAVA saw visits increase 18.4% in January from a year earlier and 40.1% in December, according to data from Placer.ai. This is despite the fact that the fast-casual category saw overall foot traffic decline year over year.
These are numbers that CEO Brett Schulman knew the brand could achieve. While he told the Nation’s Restaurant News the brand was in an “IPO halo” that skewed the numbers, he expects a long road ahead for CAVA.
This is partly because CAVA is, at this point, in a one-man category. But Schulman was quick to say that even if the category was crowded, CAVA would have an advantage because of the company’s menu and operations.
“I think it’s a reflection of this new category of cultural cuisine that we’re creating and defining…people can come and eat a flavorful, bold meal without making any compromises or sacrifices,” Schulman said.
The brand opened 72 net new units in 2023 and is expected to open 40 to 50 more in 2024. That would bring the brand to just over 350 units by the end of this year. CAVA still plans to enter new Midwest markets that Schulman discussed earlier in 2023 as part of its “Coastal Smile” strategy.
Surprisingly, the spicy and bold flavors of the Mediterranean are becoming popular with guests in places like Fayetteville, Ark., and Fayetteville, North Carolina.
“We find that this cuisine is incredibly well received,” Schulman said. “We’re seeing a great reception in the new communities we’re opening in.”
The IPO helped CAVA enter new markets through brand recognition, but Schulman believes Mediterranean cuisine was ready for its time in the sun.
Consistently ranked as not only the healthiest, but also the most popular diet, Mediterranean cuisine has been part of the cultural zeitgeist for years. However, this has not been taken to the level that CAVA takes it to.
“We are defining and creating what we think is the next category of cultural cuisine at scale,” Schulman said.
This is also something that resonates with Gen Z. This consumer group has always said they want global flavors, bolder flavors, and spices – everything CAVA has had for years.
In fact, the CAVA team has been gradually adding spicier dishes to keep up with the country’s collective taste buds over the past six months.
As it expands into new markets beyond the coasts, CAVA invests in what it knows its customers want. According to Schulman, it’s eating out. He said 64% of CAVA customers want to eat inside the restaurant rather than take their takeout.
“I think the disappearance of the dining room is greatly exaggerated. People still want human connection,” Schulman said. “People want convenience and want digital. That’s why we tried to develop this multi-channel experience, so that people can choose the channel they want.
This also means that CAVA is a hospitality-first establishment, according to Schulman, so investment in human resources is crucial.
One thing CAVA did with the funds raised in its IPO was invest in its team members. Although CAVA has always been a leader in higher pay for workers in the restaurant industry, it wanted to elevate what it offered its employees.
Schulman said CAVA does not expect to accept any price increases with the introduction of AB 1228 in California when it takes effect April 1. He said investment in brand team members over the past few years will have mitigated the impact of this bill on CAVA.
“We don’t want to just pass that expense on to our customers,” Schulman said. “We want to work on their behalf. »
And while the management team works to increase team members’ hourly pay, they also work to mitigate the price tags that have occurred over the past several years across all restaurant chains.
“The percentage of (consumers’) income they spend on food is at its highest level in 30 years,” he said. “So we want to make sure that we help them in this situation and work on their behalf and try to give them the best value proposition.”
