The brand has a proprietary, internally developed operations scorecard currently in test as well that gives restaurant leaders operational and financial metrics in a single pane, allowing for real-time, actionable data. In Q2, CAVA launched an improved real estate platform with richer analytics and anonymized mobile data that informs psychographic segmentation and impact studies. The end result is significantly reduced time for real estate managers to put together site analysis packages.
More broadly, though, infrastructure is anchoring CAVA’s ambitions. Namely, its vertically integration production capabilities. Construction of the chain’s food production facility in Verona, Virginia, is underway and should turn on in Q1 2024. The steel framing is up and the exterior envelope nearly finished.
This facility, alongside CAVA’s current 30,000-square-foot operation in Laurel, Maryland, will be able to support at least 750 locations as well as the chain’s CPG arm. “This integrated approach centralizes the production of our dips and spreads, reduces operational complexity in our restaurants, and supports consistent superior product quality,” Schulman said.
Important to note: CAVA had zero debt outstanding at the end of Q2, $352.8 million in cash on hand, and access to a $75 million undrawn revolver with an option to increase liquidity if needed. Also, it has access to a delayed-draw term loan facility with $24 million available to support the construction of the Verona facility.
Getting back to some of the guest engagement levers, CAVA revealed it’s in the early stages of relaunching its loyalty program, which will create a framework to further drive traffic, mix, and check as it grows, Schulman added. The target launch is late 2024. Behind the scenes, CAVA developed foundational customer segmentation capabilities focused on personalization.
Pilots are planned for late 2023 and geared toward encouraging deeper connections with guests and inspiring “relevant experiences that add value for both [customers] and our business,” Schulman said.
CAVA touched on catering as well, which remains in the test stage. “Many businesses, as well as collegiate and professional athletic teams, have embraced our catered products, and we believe catering can be a compelling growth opportunity,” Schulman said. “We continue to test format variations to understand how to maximize production, seizing the catering opportunity without detracting from existing channels.”
There are 10 open digital kitchens that support centralized catering hub production for CAVA as well as digital order pickup. There are also five hybrid kitchens that offer traditional in-store dining alongside digital pickup, but with expanded kitchens to fuel catering. Additionally, CAVA is testing catering in a regular restaurant format where in-restaurant and digital pickup volumes can accommodate production.
Asset evolution, in general, continues to adjust for CAVA. There are more than 20 digital pickup lanes in the fleet today. AUVs at those stores are typically 10–15 percent higher. CFO Tricia Tolivar said she anticipates drive-thrus will represent a larger portion of the portfolio going forward.
Tolivar shared CAVA’s robust Q2 traffic defied an expected consumer slowdown. She credited the “resilience of our guests” and a likely boost from the IPO. Traffic trends have remained positive into Q3, although CAVA started to see a slight shift in delivery to pickup and moderating comps growth as it laps a 3 percent or so price increase from June 2022. CAVA said it doesn’t plan to take any additional price for the remainder of the year. The brand is testing steak, too.
Like Schulman, Tolivar said CAVA’s current growth is more a harbinger of the future than a notch on its frantic timeline. “We continue to see the opportunity to reinvest in the business, reinvest in our people, and build the pipeline of leaders for us to continue on this growth as we move forward into the future,” she said. “Our focus is on the long term and what we can do to remain the category-defining brand, really execute on our proven portability and the powerful unit economics, and really leverage that massive whitespace opportunity.”