Brett Schulman makes a career in food finance.
Source: Cava
Guess who’s moving to the suburbs right now?
The Covid-19 pandemic set in motion several trends that can alter the restaurant’s space, even after vaccines are widely administered and life returns to a new normal. From the migration of dense cities to the suburbs, to a heavier reliance on digital orders for collection, curb and delivery, space continues to evolve, and the Mediterranean network Cava is betting on all of that.
The restaurant’s controller, Cava Group, acquired Zoe’s Kitchen in late 2018, making the company private. The group said its new 288 store property portfolio allows it to expand to new suburban markets more quickly, as it can convert a Zoe into a Cava location in half the time it takes to open a new restaurant – and at a lower cost.
Last year, the Washington, DC-based company made seven conversions of Zoe’s locations and there are 12 under development for 2021. About 80% of Cava’s locations are in suburban markets.
“We see the ability to unlock significant revenue growth in Zoe’s real estate when we convert it to a Cava location,” said Schulman. As a private company, Cava does not publicly report its annual revenue.
Cava, which also has a packaged consumer goods business that sells sauces and spreads at Whole Foods and other specialty markets, has seen its restaurant business shift from a focus on lunch to dinner, CEO Brett Schulman told CNBC.
“When you’re serving a suburban customer, whether it’s a family, a couple, or singles who live in the suburbs, [you need] be relevant to your needs at both lunch and dinner. I think it is very important when you are in the suburbs, “he said.
Cava is not the only chain that seeks opportunities in the suburbs. Chipotle has had success with its “Chipotlanes”, reserved vehicle routes for collecting mobile orders, and is seeing a greater opportunity to build them in suburban and rural communities, the company said. The burrito chain expects about 70% of its new stores this year to have these leads.
Shack Shack recently said in its earnings report that suburban Shacks were performing better than those located in cities. And Starbucks is expanding its drive-thru portfolio in the coming years, as it closes some underperforming locations and opens new, smaller pickups in the cities and drive-thrus in the suburbs.
‘Digital agility’
Cava also has a second digital and outdoor kitchen at each restaurant that is dedicated to preparing food for online orders, something for which Chipotle became known when its digital business prospered.
Digital revenue at Cava grew 140% year over year, and 30% of total revenue comes from digital channels that did not exist before Covid, including sidewalk delivery, Schulman said.
“I think it was one of the things that we were able to do, to have what I call ‘digital agility’ at Covid. We have an internal engineering team and these resources have allowed us to create these channels quickly and create these access points based on the needs of Covid consumers, “he said.
And the brand is poised to start eating again later this year, but Schulman hopes that being everywhere – locally and online – will help strengthen the consumer experience.
“We really focus on hospitality, it’s a central aspect of our brand, and the people who have that involvement, walking along the line with our team members [in stores] and merge those physical and digital channels. So whether you want to get involved with us through our digital or physical channels, that hospitality is at the heart of it all, “he said.