Cava doesn’t just provide salads and bowls to its loyal consumers. finance brothers and suburban people, is full of itself. The fast-casual chain, known for its Mediterranean-inspired bowls and salads and better-for-you brand, raised its full-year sales outlook, beating its first-quarter profit forecast.
the company reported Sales on Wednesday rose 30.3% year-over-year to $256.3 million, compared with $196.8 million in the previous quarter despite lower store traffic. Same-restaurant sales have increased from 2.3% to 30.7% over the past two years, and the chain opened 14 more locations in the last quarter as customers demanded falafel and lamb bowls with “crazy” whipped feta toppings. Cava now expects same-store sales to increase 4.5 to 6.5 percent, up from the 3 to 5 percent it initially expected.
CEO Brett Schulman said customers showed great interest in pricier menu items like harissa honey chicken and didn’t hesitate to add items like drinks or extra pita chips to their orders. As a result, Cava bucks the trend with its customers. lose one’s appetite For fast food than higher prices.
“We’re seeing a very resilient consumer consistently across the country and across all income brackets,” he said. said bloomberg. “We can’t see the check management,” he added.
Cava has increased the more expensive dishes on its menu. Introducing grass-fed steak—A move to bolster sales and attract more customers in the evenings, following rival Sweetgreen, which now accounts for 46% of the company’s sales.
But more premium menu items don’t mean the company is passing the costs on to customers, Schulman argued. Even though the company raised its prices Less than 3% in JanuaryCava “does not plan any further price increases.”
Beyond fast food
But Schulman attributes Cava’s success beyond promising dinner items and pita chips to a sweet spot in the restaurant industry, arguing that diners at sit-down restaurants are looking for affordable fare, and so are fast-food customers. You won’t find cheap or healthy meals at a traditional drive-thru.
“Consumers are really attracted to our value proposition, and the traditional full-service dining model is struggling to deliver that value proposition to the modern consumer,” he said. “As the prices of traditional fast food rise at a faster rate, the relative value proposition of our gourmet Mediterranean cuisine has improved.”
In fact, a May LendingTree survey found that nearly 80% of U.S. consumers now view fast food as a luxury good because of its high prices, which is hurting sales. McDonald’s saw its sales fall after the price of a Big Mac hit $18 earlier this year. . Schulman believes that with the growing perception that fast food is no longer affordable, consumers are willing to spend a dollar or two more on food they perceive to be healthier or of better quality.
The success of Sweetgreen and Chipotle, which tout themselves as healthier fast food alternatives, backs up Schulman’s argument. Sweetgreen posted: 26% surge in revenue Earlier this month, we opted for healthier oil and dinner options like Cava and Chipotle as well. First quarter sales increase of more than 14%. The success of these fast casual stores is partly due to higher profit margins—about 18% to 26%, compared to 18% and 15% for McDonald’s and Wendy’s.
Cava is already looking into his next course. The company plans to open 50 to 54 more locations in 2024.
“We are now at 323 locations, so we have a lot of capacity to continue to grow,” said CFO Tricia Tolivar. luck this week.
