Brett Schulman talks Mediterranean cuisine with the passion of a convert. In early 2009, Schulman, then the COO of a company later acquired by snack giant Utz, started helping three men in Maryland's DC suburbs keep their local Greek restaurant afloat. Eventually, they asked Schulman if he would join the business as its fourth partner.
“Let me ask my wife,’” Schulman replied. “That’s a career change.”
Roughly 15 years later, Cava is a Wall Street favorite after going public with one of the hottest IPOs of 2023. On Thursday afternoon, Cava gave investors fresh reason to cheer after it released second quarter earnings that came in above analyst expectations.
The company reported revenue of $231.4 million, compared to $219.5 million expected, up 35% from the same quarter last year. Earnings per share came in at $0.17, beating expectations by four cents. Quarterly net income almost reached $20 million, compared to $14.8 million expected and up from $6.5 million last year.
Schulman told Fortune he’s especially proud of increases in traffic and same-store sales of 9.5% and 14.4%, respectively. The numbers stick out as traditional fast-food giants like McDonalds experience sluggish sales with customers seeking options healthy for their body and wallet.
Few restaurant stocks have come close to keeping pace with Cava since it went public at $22 per share last June. Shares nearly doubled on the first day of trading and have soared nearly 140% since, trading above the $100 mark before the announcement.
“I think what's been really gratifying is the receptivity we've had as a public company,” Schulman said, “and the acknowledgement of the public markets of all the hard work our team has put in the last 14 years.”
Cava plans further expansion
When Schulman first visited the founders’ full-service restaurant in Rockville, Md., he was struck by the diverse patronage—some diners dressed up, others wore backwards baseball caps—and fell for the food.
Developing the menu into a fast-casual format, he believed, would satisfy the changing pallets of consumers. Almost 60% of Cava’s customers, according to a recent company presentation, are Gen Z or millennials.
“They don't want to make compromises or restrictions,” Schulman said. “They want their flavor, and they want their health too.”
With consumers seeking value and wary of high prices, Schulman said Cava can offer both a healthy quick stop or an affordable meal out. The company recently boosted its protein offerings by offering steak and is adding more comfortable seating and greenery inside its restaurants.
“We're seeing trade down from traditional casual dining, trade up from traditional [quick service restaurants] and trade over from legacy fast-casual players,” he said.
The chain’s footprint keeps expanding. The company added 18 new restaurants last quarter and now plans to open 54 to 57 this year, up from 50 to 54 in previous guidance. Currently, the company has 341 establishments primarily scattered across the East Coast, Southwest and Southern California. It wants to open 1,000 by 2032, Schulman said.
Achieving scale, however, is a constant balancing act. Doing it with restaurants, he likes to say, is not the same as it is as with a software-as-a-service firm (also known as SaaS.)
“It takes a lot of great people, a lot of great training and process and systems and infrastructure,” Schulman said.
To ensure it has leaders to open restaurants in new markets, the company established a feeder program to identify and train its most talented general managers. It’s also looking to assist them with Gen AI, piloting a system that tracks the service line and can tell staff how much food to prep and cook at a given time.
Schulman said Cava hopes the initiative can help mitigate waste and free staff to focus on hospitality. Call it the AI boom meeting the Mediterranean revolution.
