CAVA in early February confidentially filed an IPO, a move that could shift a recent tide in foodservice. If the fast casual goes public, it would be the first to do so since 2021—a year when five brands hit the market. It’s been a volatile arena since, with the majority of M&A owing more to struggling brands looking to recapitalize and restructure. Rising interest rates have kept outside equity interest tepid as well. Simply, not many brands have wanted to sell when performance was down and the return uncertain, or on the doorstep of what hopes to be a more lucrative stretch.

“I think [the IPO market] is a little bit of a different dynamic,” Nick Cole, head of restaurant and hospitality finance at Mitsubishi UFJ Financial Group told FSR. “I would say CAVA is early in the IPO cycle. Normally, capital pours into early stage recovery industry investments when we start to feel the economic recovery starting. That’s when equity owners buy opportunistically into industries like restaurants. And so capital coming into equity, evaluations picking up, I would think that’s more of a 2024–2025 phenomenon than it is the second half of this year.”

The thing about CAVA, however, is the brand’s history—both recent and origin—has been anything but routine. In 2022, CAVA posted 83 openings (a figure that includes conversions of Zoës Kitchen venues), entered seven new states and 10 markets, and debuted seven of its digital drive-thru pickup lanes, bringing the total to 17. CAVA is just about finished flipping Zoës over, a move that began in 2018 when CAVA acquired the publicly traded brand in a $300 million deal funded by Panera Bread founder Ron Shaich’s ACT III Holdings. CAVA next revealed a $40 million funding round in December 2019 and announced a $190 million investment, led by T. Rowe Price Group, in April 2021; it reportedly increased CAVA’s value to almost $1.3 billion.

For a brand (then known as Cava Mezze) that began in 2006 as a 1,700-square-foot, full-service Mediterranean restaurant in Rockville, Maryland, evolution has arrived at a rapid clip. Ike Grigoropoulos, Chef Dimitri Moshovitis, and Ted Xenohristos joined cofounder Brett Schulman in 2010 to open CAVA as a fast-casual, assembly line brand. And nothing about what’s happened over the years could be characterized as stagnant.

Let’s start with the drive-thrus. CAVA began constructing them in 2018 and opened its first in 2019. The goal being to offer suburban customers broader access to the brand.

Schulman, a father of three, also understood the challenges (impossibilities) parents face when it came to picking up food with kids in car seats. Yet like countless other plans born initially from convenience, COVID changed the rules. Drive-thru went from an access point to the only entry for thousands of sites across America. “Certainly, it amplified the need for that type of channel offering,” Schulman says. “And we leaned into expansion of that format.” All 17 today also have dining rooms, but with dedicated second digital makelines for the pickup window. This flexibility has become a theme for CAVA and one of the reasons it’s positioned to rally from current challenges.

“We find that our guests love the optionality of both those channels, depending on what their need is on a given occasion, or a given time of day, whether lunch or dinner,” Schulman says.

“We always felt the demise of the dining room was greatly exaggerated,” he continues. “It wasn’t an either or, it was an ‘and.’”

The playbook for CAVA as it explores going public is one written on guests’ terms and defined by choice; just as customization catapulted the assembly line category from its inception, so today is the omnichannel experience for those brands built to do so, Schulman says. Customers are asking restaurants for the ability to order where and when they want, from whatever avenue. If they want to procure food like they do products on Amazon, from a mobile device with a confirmation screen, CAVA developed an in-house app that follows the flow of its in-store experience (this recently was reskinned with updated branding. CAVA, last November, also launched a unified website to improve ease of ordering and brought together CAVA.com and order.CAVA.com). If consumers want to dine inside, the brand continues to keep its frontline separate so there’s no bottleneck.

“People want to traffic through our brand and engage with us both digitally and physically,” Schulman says. “So how do we give them that optionality to get CAVA on their terms?”

CAVA has been bracing for this landscape, on some level, for years. Back in 2015, Schulman says, the chain started retrofitting second dedicated digital makelines into units. Every new store got one and existing ones began adding them. CAVA recognized it could run into trouble otherwise.

It was a dynamic taking place at fast casual’s top level. As digital poured into the picture, Chipotle raced to add these throughout its business to solve what ultimately became its biggest unlock to revenue expansion—speed across both channels. Customers who ordered ahead weren’t sure where to stand when they arrived in-store. And, behind the scenes, employees were equally struggling to prioritize which meals to make, in what order, to keep the line moving. How to balance and throttle business was mission critical. Adding second makelines essentially segmented Chipotle’s business into two parts, and efficiency followed.

CAVA walked the same line. In both cases, they were moves ahead of COVID’s digital tidal wave. “There’s nothing more frustrating than being in our assembly line format and waiting for your order to be built and having a team member build a digital order in front of you and have to wait,” Schulman says. “That’s not what we wanted. So we focused on not just setting up our guest for success, but also setting up our operators for success with those second digital makelines.”

It signaled a shift in the operator mindset. CAVA began rewiring restaurants from a digital ecosystem standpoint, building infrastructure in order to manage order flow. The company developed fixes in-house, such as throttling capabilities “so that [employees were] not just drinking from a firehouse.”

“And also,” Schulman says, “so we’re able to deliver on that promise time for our guests.”

All of CAVA’s channels have grown “significantly” over 2019, he adds. Comps are up. As a percentage, digital might be off its peak as dine-in rebounds (the same is true of nearly every chain these days), but the dollars have grown. In-restaurant sales currently mix more 63 percent of the business.

Before COVID, CAVA’s digital platforms represented 20 percent and as high as 50 percent in some urban locales. At apex, it reached 70 percent.

The present reality is two-pronged, where CAVA’s dine-in traffic has flooded back and its digital remains elevated. But the key, Schulman says, to any of that holding up is operationally executing against both without detracting from either. Customers who walk in can’t get stuck behind digital; and those order-ahead times have to be accurate or guests won’t trust the experience.

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CAVA’s Next Level

For a multitude of quick-service trends, the pandemic did as much to accelerate oncoming realities as it did to invent them. But one clear leap has been format design.

If you go back decades, much of the sector, especially fast food, was unchanged since inception. No place was this truer than the drive-thru. It’s why technology was never as prevalent in restaurants as other fields. In the 90s, the point of sale was the revolutionary disruption from the cash register. Then came kitchen display systems. Yet overall, retail has long felt ahead of restaurants. What’s happened, though, is technologies amid COVID triggered broader access to brands, just as Schulman mentioned. So operators have had to quickly rethink the traditional model and how it works.

You only need to look at Taco Bell’s four-lane, two-story Defy drive-thru. Lee Engler, cofounder and CEO of Border Foods, the family-owned franchise group that built the location, says the store adjusted how customers could access the brand. Yet it also changed the way operators could help guests experience the brand. And it was an evolution hiding in plain sight. Taco Bell was a brand already well-versed in fast drive-thru service. This model, however, gets diners through in 2 minutes or less (if they don’t stop to take pictures)—all without speaking or seeing an employee, if that’s what they want. “The challenge for us is how are you going to disrupt yourself,” COO Mike Grams told QSR.

The boil point sounds familiar, though: “I think we’re going to provide full flexibility in that experience for our guests,” Engler added.

Schulman and CAVA stepped into this world looking to turn that concept forward. How could it orient kitchen production to meet physical and digital demand in any trade area?

“That can come to life in many ways,” Schulman says.

As CAVA spreads to new markets, either through fresh builds or by transforming old Zoës, it’s pouring agility into the real estate pot, not unlike publicly traded Shake Shack, which recently garnered praise from Goldman Sachs over the brand’s “diversification of store formats and [we] think this will be key in driving unit growth for the company.”

Here’s how it unfurls for CAVA: The brand could have a store in New York City, Schulman outlines, without any in-dining seats, but with multiple digital makelines as well as an in-store serving line. Or there could be a suburban CAVA with 80 seats in the dining room as well as an in-restaurant makeline and a digital one that accompanies a pickup shelf. Further, there’s CAVA’s digital drive-thru pickup lane restaurants that boast, as highlighted earlier, a dining room, in-restaurant serving line, and digital makeline with a pickup window.

More recently, however, CAVA began testing two new formats—a “digital kitchen” and a “hybrid kitchen.” The latter serves in-store guests as well as expanded catering and digital orders. The digital kitchen doesn’t have an in-restaurant serving line and is strictly for digital order pickup, delivery courier pickup, and catering hub production that continues to grow as CAVA pilots the channel.

“We think about it as having all of these options of formats, a portfolio of options, we can apply to a trade area to meet a guest’s needs on their terms,” Schulman says. “Whether that’s one of our mainline restaurants or one of these drive-thru digital pickup lanes. Or potentially one of these digital kitchens. It’s again, orienting our digital or off-premises production and our physical production in a multitude of ways.”

To phrase it differently, CAVA—and investors—see potential in systems that can flex up and down depending on the needs of a specific market. It’s the post-COVID table stakes for restaurant growth.

For instance, CAVA’s hybrid kitchen, which is slated for Vienna, Virginia, is situated adjacent to the Tysons Corner office market. But there’s also a solid residential component where customers want to eat inside. So CAVA designed a location that can service the latter, yet also with expanded capacity to cash in on office catering.

To expand on the catering topic for CAVA, Schulman says it’s a channel guests have requested “for the decade [plus] we’ve been doing this.” The brand launched the option in November 2021 in New York City. It’s mostly been a target initiative over the years simply because CAVA’s existing fleet didn’t boast the capacity to support it in addition to current in-store and digital business. When CAVA brought Zoës into the fold, though, it gave the company an established catering arm that allowed it to explore how the channel could translate to CAVA as well. Additionally, it suddenly had ample real estate to adapt and support it, and not at the expense of its present restaurant and digital experience. Roughly 17 percent of Zoës revenue was driven from catering before the CAVA deal.

Schulman says catering represents “another way to meet our guests’ need with our Mediterranean food in another format setting.” The same is true of its CPG line.

“So how we thought about it is where we can use these digital kitchens and these hubs to be more centralized production and not distract from our regular mainline CAVA production capabilities,” Schulman says of catering. “But yet take advantage of that catering opportunity and meet our guests in that channel.”

At the start of the year, there were nine digital kitchens open across CAVA’s system. One hybrid store was live in Manhattan and another was projected to open within a couple of months. Schulman says CAVA is looking at eight or so to support catering in the near-term.

“Having that ability for people to grow both personally and professionally and feel supported, to have a career not a job, really shows up in how they’re delivering that hospitality.”

The labor dynamic, more shifting tides

CAVA’s digital growth enabled it to view labor deployment models through a renewed lens. It had to properly balance staff against digital and physical demand for any given restaurant. And as evident by CAVA’s store diversification, this was hardly a blanket approach.

Over the course of the day, by hour, CAVA had to ensure it could adjust and recalibrate its historical model to address the changing behavior of its guest.

“We always talk about technology to enhance the human experience,” Schulman says, “not replace it. We want our technology to empower our team members to be able to deliver on that experience.”

CAVA has long worked to separate itself from a labor perch. Back in 2016, it took starting wages to $13 an hour. It’s well over $15, on average, now. “Seems like a lifetime ago,” Schulman says. “We’ve made investments every year since. I think we were the first, if not one of the first, to give our people paid time off to vote. Earlier this year, we launched mental health benefits for all team members whether they’re on our health plan or not, accessible by all of their family members.”

A core banner from the outset was, “Our mission is to bring heart, health, and humanity to food.”

All of Schulman’s cofounders grew up with families in the restaurant industry and saw firsthand the stereotypes of the job; long hours, brigade managers. In turn, CAVA set out to become a place where you could have a career in the restaurant industry that wasn’t predicated on burn and churn.

One of the vital tenets today, in the wake of the “Great Resignation” and other labor challenges, is giving employees the means to do exactly what Schulman explained throughout this story; to not overwhelm them or get them racing to an easier, more enjoyable job versus one that just pays better. “My partners, when I first met them, I said we’re not in the restaurant business; we’re in the making people happy business,” Schulman says. “You’re going to be happy as a guest if you’re getting the hospitality that we want our team members to deliver. So making sure we’re putting them in a position to not only deliver that, but also have them feel supported. And empowered to do it. And if they’re growing, both personally and professionally, both in our business, not just in our four walls but beyond our four walls.”

Restaurant leaders can make six-figures at CAVA. But training in general, alongside a career ladder, Schulman says, has been one of the main unlocks of a changing workforce. “Having that ability for people to grow both personally and professionally and feel supported, to have a career not a job, really shows up in how they’re delivering that hospitality,” he says.