CAVA CEO Brett Schulman said a “confluence of factors is coming together” to fuel the fast casual’s growth, including the power of its value proposition, a disciplined focus on execution, and CAVA’s status as a “category-defining brand.”
Same-store sales were up 18.1 percent in Q3, driven by a 5.2 percent increase in menu price and product mix, along with a 12.9 percent increase in traffic—making it one of just a few publicly traded restaurant brands to report strong traffic growth in the period. Revenue grew 39 percent year-over-year to $241.5 million. AUVs were $2.8 million, up from $2.6 million a year ago. Restaurant-level profit was $61.8 million, or 25.6 percent of revenue, versus $43.6 million, or 25.1 percent of revenue, in Q3 of 2023.
“For the modern consumer who craves bold, adventurous flavors, is increasingly mindful of their well-being, and sees food as cultural currency and a form of self-expression, Mediterranean is meeting the moment,” he said during the company’s Q3 earnings call on Tuesday. “We believe the category is at a tipping point.”
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The chain’s focus on hospitality is an increasingly powerful differentiator. Schulman said that over the last two decades, as the world interacts more often with screens, the average person has lost 24 hours a month in personal connection.
“As technology and automation infiltrate everyday life and the front lines of more concepts, consumer touchpoints are becoming increasingly transactional, removing the joy in humanity from the experience,” he said. “At CAVA, we believe technology should enhance, not replace the human experience and we’re leveraging it to create warm personal moments across our physical and digital channels and to support our team members in engaging and connecting with our guests.”
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As the company works to deepen personal relations with guests—even as it scales—it recently launched a reimagined loyalty rewards program. It includes an earn and bank points model with a menu of reward redemption options and was rolled out earlier than planned. Since then, loyalty percent of sales has grown more than 200 basis points.
The brand is also benefiting from recent culinary innovation, including the new Garlic Ranch Pita Chips, which marked the first-ever new flavor for the cult-favorite item. Schulman said the LTO, which combines buttermilk, mint, garlic, paprika, sea salt, and onion, has been “incredibly well received” by guests and is driving incremental attachment.
The Garlic Ranch Pita Chips are trending on social media with over 12 million impressions across platforms, along with 247 million earned media impressions. The brand is also continuing to see strong incidents in steak more than four months after the protein launched nationwide.
“These initiatives are driving brand awareness, which is up 8 percentage points since the IPO and growing with each new launch,” Schulman said.
He shared that the culinary team is developing a multi-year roadmap across various categories, covering bases, grains, beans, and toppings, as well as attachments. The team is also working on expanding beverage and dessert options, along with new flavors for pita chips. Those fresh menu innovations, along with CAVA’s loyalty program enhancements, are expected to boost comps over the next year.
The reimaged loyalty program is one of several tech initiatives underway at CAVA. On the back end, the company rolled out a new labor scheduling and deployment model—also ahead of schedule—that aims to put “the right people in the right places at the right moments.”
The tool reallocates ideal forecasted hours more effectively and efficiently with better alignment to team member tasks, channel mix, and revenue curves. Early results are promising, and CFO Tricia Tolivar said CAVA has identified opportunities to strategically invest in lower-volume restaurants to drive increased revenue over time.
The new labor and deployment model takes existing hours in the restaurant and redeploys them into peak periods. It also creates more clarity around the roles and where they should be placed during those peak times.
“What we found during the pilot is that in some of our lower-volume restaurants, when we added a little bit more labor to the restaurants, we saw a modest increase in restaurant sales, as well as an overall improvement in guest scores and experience,” Tolivar said. “So, that’s where we think we might have an opportunity. But it’s a small portion of the overall portfolio and just an example of the early lessons and how they might help drive our average weekly sales as we move into 2025. The real thing about the labor model and the labor and deployment model is that we’re really excited to see it improve speed and service, and that’s something that’s going to benefit the guests as well as CAVA.”
The company is also progressing on its multi-year Connected Kitchen initiative as part of its broader mission to better support teams and make restaurants easier to run. Its generative AI video technology monitors how quickly ingredients on the in-restaurant makeline are being depleted and alerts the team in real time for prep and cook batch amounts. The test and learn phase of the AI video pilot is complete and is now live in four restaurants. Additionally, the company has expanded its new kitchen display screen test to 25 locations. Schulman said the pilot deploys new and improved digital order management capabilities for CAVA’s second makeline.
“While both initiatives are in the very early stages, we believe they can improve quality and consistency, increase order accuracy, boost speed of service, and simplify prep and planning,” he said.
CAVA netted 11 new restaurants during Q3, growing in new markets like Chicago and existing markets including Texas, California, Virginia, South Carolina, Tennessee, and Oklahoma. That brought its total unit footprint at the end of the period to 352 units.
Schulman said the 2024 new restaurant class is the strongest yet, outperforming expectations and giving the team “even more confidence” in the brand’s portability. The company is targeting a 17 percent unit growth rate in 2025. It plans to enter South Florida early next year and expand its Midwest presence with at least two additional markets. Many of those restaurants will incorporate CAVA’s new Project Soul design.
“For some time, we’ve been at the forefront of a contrarian point of view, that the demise of the dining room is greatly exaggerated,” Schulman said. “In addition to convenience, consumers are looking for warm, welcoming places to dine with family and friends. Project Soul expresses our Mediterranean hospitality and taps into guests’ desire for human connection, including softer seating, more greenery, and a warmer brand palette.”
CAVA raised its full-year guidance on the heels of a strong Q3. The company now expects 56-58 net new openings, up from its previous guidance of 54-57. It also raised its same-store sales guidance from 8.5-9.5 percent to 12-13 percent, and its restaurant-level profit margin guidance from 24.2-24.7 percent to 24.5-25 percent.
