Good morning. Cava customers used to loading toppings on salads and pita wraps while ordering beverages like blueberry lavender juice may soon find themselves with a new favorite at the burgeoning fast-casual chain.
Next week, Cava is launching a fire-grilled steak, “filling a perceived gap in our menu,” CFO Tricia Tolivar told me. "Right now, we don't have a beef offering." (A beef meatball was removed from the menu last year.) The company’s culinary team has been perfecting the steak for about two years, recently offering it in specific markets such as Dallas and Boston.
“The guests are responding well, and that gave us the confidence to bring it to all of our restaurants this summer,” Tolivar said. “Our steak Mezei salad is outstanding.” That dish combines the steak with roasted corn, Feta cheese, red pepper hummus, tzatziki, sun-dried tomatoes, Aleppo pepper, and Greek vinaigrette dressing atop arugula and spinach, she said.
Offering that kind of variety, Tolivar continued, allows Cava to attract different customers willing to spend at different price points. Not everyone will come for the steak, but it could help boost dinner sales, which now account for 46% of sales overall.
Even with inflation and prices rising everywhere consumers look, Tolivar noted, "we have not seen a lot of negative impact at all," and many restaurant guests are continuing to add pita chips or fresh juice to orders. “That's really driving what we call an increase in per-person average," she said.
The company on Tuesday announced its latest results, for the fiscal quarter ending April 21. Revenue soared 30.3% to $256.3 million, up from $196.8 million a year ago and above analysts' estimates. Cava reported its fourth straight quarter of net income and its first quarter of positive free cash flow as same-restaurant sales rose 2.3%, driven by a 3.5% increase from menu price and product mix partially offset by a 1.2% decline in traffic. In Q4 2023, Cava’s two-year traffic was approximately 13%, and that grew to 17% in Q1 2024, Tolivar said.
Cava, which now expects to open 50 to 54 restaurants this year, up from a Feb. 26 forecast of 48 to 50, also raised its same-restaurant sales outlook range to 4.5% to 6.5% from 3% to 5%. And, the company recently opened a $30 million state-of-the-art manufacturing facility in Virginia to help produce dips, spreads, and dressings. (Cava also has a facility in Maryland.)
The new facility allows for more vertical integration, which cuts costs and adds scalability, Tolivar said. It's capable of producing goods for 750 Cava restaurants. “Right now, we're at 323, so a lot of capacity to continue to grow," she said.
Sheryl Estrada
sheryl.estrada@fortune.com
