Good morning. Growth for Cava, the Mediterranean fast-casual restaurant chain, is still booming.
The company announced on Tuesday its earnings results for the third quarter that ended Oct. 6. Revenue grew 39% to $241.5 million as compared to $173.8 million in the prior year quarter. Cava has had 15 consecutive quarters of revenue growth going back to Q1 2021, CFO Tricia Tolivar told me on Tuesday.
Q3 revenue growth was fueled in part by 11 net new restaurants in the quarter, Tolivar said. “However, our same-restaurant sales growth of 18% and driven by 12.9% traffic growth is also another significant contributor to the overall growth,” she added. “We do anticipate hiring to support that growth; we view our team members as assets and not expenses."
Is it the juicy grilled steak option released at all Cava locations in June that’s luring customers to restaurants? In part, Tolivar said. In addition to new proteins like steak, the other factors driving foot traffic include Cava’s loyalty program, social media promotion, she explained, as well as newer restaurants gaining traction—and of course the food.
Brand awareness for the company is “up significantly” since its IPO debut in 2023, she said. And Cava has found that the brand is attracting diners of all age groups but there’s particularly been interest among Gen Zers, which is a trend expected to continue with Gen Alpha, Tolivar said.
The younger generation tends to seek more adventurous flavors and different experiences when dining, she said. "We think that's another factor that's supporting the growth we’re seeing," she added.
Cava now has 352 restaurants. Its locations are primarily across the East Coast, the Southwest, and Southern California. The company is expanding into South Florida in early 2025, and into a couple of new markets in the Midwest, she said.
As CFO, I asked Tolivar if she has any external concerns as we head into 2025. She’s keeping an eye on interest rates. “Any inflationary pressure might have an impact on interest rates, where there would be fewer reductions, and that could translate into potential tightening in the real estate market,” she said.
But Tolivar is buffering the company’s pipeline. For example, if Cava has a target of opening 100 restaurants, they’d build a pipeline of 130 to compensate for any challenges, she said.
"We find that doing the right thing for the long term will drive the best return," Tolivar said.
Sheryl Estrada
sheryl.estrada@fortune.com
