Cava Group In The Sweet Spot? CEO Sees Consumers Trading Down From Casual Dining, Trading Up From Fast Food: 'We Don't Think It's An Either Or'

Zinger Key Points
  • Cava Group is seeing demand above industry averages due to its differentiated offering combined with convenience and experience.
  • "We are seeing folks trade down both from casual dining and trading up from traditional fast food," CEO Brett Schulman says.

CAVA Group Inc CAVA turned in better-than-expected earnings results for the first quarter late Tuesday. Following the print, co-founder and CEO Brett Schulman attributed much of the success to Cava having found a sweet spot.

What To Know: Wednesday on CNBC’s “Money Movers,” Schulman explained the company is seeing demand above industry averages partly due to its differentiated offering of Mediterranean cuisine becoming increasingly appealing, but also because the company offers a unique combination of convenience and experience.

“We are seeing folks trade down both from casual dining and trading up from traditional fast food for that great value proposition that we are able to deliver,” the Cava Group CEO said.

Cava is focused on quality and relevance alongside convenience and experience, which helps set it apart from other dining options, Schulman said, adding that the company offers quality Mediterranean food that is on trend through both digital and physical channels.

Casual dining models struggle to deliver relevant value propositions to modern consumers from a time and cost standpoint. On the other hand, traditional fast food options have outpaced Cava’s price increases, which is making Cava an increasingly attractive option, he explained.

“We don’t think it’s an ‘either or,’ we think it’s an ‘and.’ You can have great digital convenient experience and a great physical experience at Cava,” Schulman said.

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Cava's first-quarter revenue increased 30.3% year-over-year to $256.3 million, beating analyst estimates of $245.935 million. First-quarter earnings of 12 cents per share also outpaced estimates of 5 cents per share.

Cava reported same-restaurant sales growth of 2.3% and opened 14 new restaurants during the quarter, bringing total locations up to 323, up 22.3% year-over-year. The company expects to open 50 to 54 new restaurants throughout 2024.

Analysts have highlighted the opportunity for significant restaurant expansion as one of the main bull theses for Cava. Schulman noted that the company is carefully planning its expansion to make sure it continues to deliver on its value proposition.

“Restaurants are really hard to scale. I like to say they don’t scale like SaaS software. It takes a lot of great people, a lot of great leaders in our restaurants so we want to make sure that we put our best foot forward,” the Cava CEO said.

“We’ve had a tremendous white space opportunity. We want to make sure when we open those restaurants that we’re meeting our guest’s expectations and have the right people in the right roles.”

Check This Out: CAVA Group Analysts Boost Their Forecasts After Upbeat Earnings

CAVA Price Action: Cava Group shares were up 2.06% at $84.24, according to Benzinga Pro.

Photo: Shutterstock.

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