Cava Group, Inc. (CAVA) September 2026 Conference Transcript

Okay. All right. Well, name is Brian Mullen. I'm the restaurant and food distribution analyst here at Piper Sandler. Very happy to have the team from Kava here. I have co-founder and CEO, Brad Shulman. We also have Tricia Talvar, the CFO, and we also have Katie from the Investor Relations team in the audience. Thanks for being here. Just wanted to start with a kind of broader health and wellness trend question. You know, maybe, Brad, just to start, speak to the how and the why behind Cava has been so well-positioned on that front from its inception to taking you to now. And then, too, maybe with that in mind, are there any dynamics or trends you're monitoring or thinking about that might suggest a need for tactical tweaks or things you want to stay on top of as things evolve in the next 10, 15 years?

Brian, thanks for having us. You know, we feel like the trends continue to move in our direction of our Mediterranean cuisine, the unique cuisine where taste and healthy nights. And we've seen this build over the last 15 years that we've been in business where really driven by a couple secular trends. One, the growing diversity of the country, people's palate shifting, seeking bolder, more adventurous flavors, combined with increasing interest in longevity, health and wellness. And that's where our food sits at the intersection of that unique cuisine where it tastes and health unites. And then even more recently, with the advent of GLPs, you've seen some underlying shifts in people seeking out more protein, more fiber, more satiating cuisine that isn't high in calories, isn't high in sugar, not ultra processed, not high in bad fats. And again, that's shifting people to our type of food. And when you come into Kava with our roughly 38 ingredients on the line, you can build over 17.4 billion combinations. And through those combinations, meet any of your dietary needs, restrictions with our menu. And so we've seen people shift even more to our style of eating where they realize that, hey, I can come in, pick out whatever I want, eat well, and not have to give anything up while doing it. And if they want more protein, if they want more fiber, they can build a combination that suits their specific needs.

Okay, thank you. And then the question on marketing, you know, on the earnings call last month, you talked about being in the market for a chief marketing officer. You know, related to this process, just talk about the genesis here, what you are bringing this person to achieve over time, and what you're looking for in terms of background or experience.

I'm excited to say we've made a new hire. We'll have an external announcement here shortly. And, you know, what we were really looking for was someone who really understands how to effectively communicate our brand personality and our brand essence to the external world in a compelling, differentiated way, a true storyteller, someone that has consumer experience, not necessarily restaurant experience, but someone who really understands how to build a consumer brand. because we have gotten a lot of great credit from our guests, but there's tremendous passion from our guests out in the world, and we want to make sure we're unlocking those passions in the cultural consciousness and building that deeper emotional connection as to why they're eating at Kava, what the Mediterranean way, what our Mediterranean way is really about, and to give them opportunities to show that passion in fun, unique ways, whether that's collaborations, whether it's social media, whether it's real-world experiences, and through our visuals and our copy. So very excited to announce that soon and take our brand equities to the next level.

Thank you. That's exciting to hear, and I look forward to hearing who that is. You know, another item coming out of the earnings call last month, it caught my attention. You know, you talked about a big opportunity is actually delivering a great experience every day in the restaurant, which I know sounds basic, but, you know, do you have a rough sense? Do you measure this, you know, how often you're giving the hospitality you'd like with the food tasting exactly how you like, with the store looking exactly how you like? And if you want to tie in having, you know, Doug Thompson as your COO and the role he'll play in that, I'd love to hear how you're thinking about that.

Yeah, it is basic, but I think it's one of the most underappreciated aspects of restaurants and one of the best ways to drive traffic is to be exceptional every location, every shift. And I'd say right now we're doing that in two-thirds of our restaurants. I think we still have a lot of opportunity to go from good to great and exceptional. And very excited to have Doug, who joined us back in March, you know, obviously has a deep track record and experience of, number one, building great restaurant leaders, because great restaurant service and hospitality and experience starts with the leader of the restaurant. And so we measure this in many different ways. And Doug's got, again, a lot of experience in building the leaders, but a real deep appreciation of life and career in the restaurant industry for fresh food, friendly service, exceptional hospitality. And so we measure this in a number of different ways, whether it's the friendliness or rudeness of the staff, whether it's the accuracy of the food, whether it's the hold times of the food, and guest satisfaction scores. So we look at this on a regular basis, and we understand what can we be doing to set our teams up to deliver on that exceptional hospitality. And it's everything from, you know, we've done some things recently where we rolled out a new produce slicer. So our cucumbers and our pickles were one of the few items they were still cutting by hand. We now have a little piece of equipment. They can lay them all out, pull the lever. It automatically cuts them for all of them. And then pre-marinated chicken, which we've started to roll out in a number of markets. And again, this drives better flavor consistency, better quality of our chicken, and removes all that complexity of marinating the raw chicken in our four walls. And it frees our team up to have that human connection, to deliver great hospitality, to do more table touches and interact with our guests. Because we know how valuable that is when we're doing it at the restaurants. We do it at every location or every shift every day. So, you know, Doug's mandate when he came in was to build out our GM pipeline or pipeline of role-ready leaders to create a greater owner-operator mentality of those leaders and then to focus on exceptional hospitality and fresher food.

Okay. Very good. And then a question on catering. You know, you've been clear you want to be really thoughtful and careful how you eventually roll this out. You don't want to do anything to disrupt the operations. I'd love to just hear about what you're learning in tests right now and maybe a bigger question. Assuming you do ultimately sort out the production the way you want it to be, once you feel good about that, have you given any thoughts on how you would drive awareness, how you'd want to go to market, what a national launch might look like if you did it that way? Just really interesting to hear how you're thinking about all that.

Yeah, what we've learned is people love Kava in a catered format. We've catered almost every professional sports team at this point. Now we're not just catering at home when they're on the road. They're asking for coffee to be catered in addition to offices, schools, megachurches. And what we want to make sure is how do we set up our production capacity to meet this demand? Because we've seen this ourselves, the downsides of what catering can do to a business. We acquired Zoe's Kitchen back in 2018. Zoe's had a fairly low AUV, and so to try and optimize the four-wall economics, really leaned heavily into catering, became 17% of the business, but you'd walk into a Zoe's restaurant at lunchtime, and all the tables would be full of bags, the team would be solely focused on catering, and it really deteriorated the quality of service of the other channels. So we didn't want to make that same mistake, and knowing that our average unit volumes are pretty significant, we wanted to understand, is there any room for production capacity in some of these high-volume restaurants, or do we do a more purpose-built hub-and-spoke hub-and-satellite model? So we've been in tests for over two years now. We have a market test going on in Houston. We'll roll to a second market test in Philadelphia next month, testing these different strategies. In the meantime, we've paralleled path to packaging, the technology. We did carry over from our Zoe's acquisition. We have an internal catering, high-touch catering sales team. So that will be part of the future rollout, you know, B2B high-touch service, and then complement it with a new self-service site. So we've built out the new site. It's not live yet. It will go into test next month so that whether you are getting the high touch from the catering sales team or then you utilize the self-service model or if you're strictly a self-service customer, that you've got great tools and capabilities to order and great visibility. But most importantly, on the back end of that technology is load balancing and capacity management. So ultimately, we'll look at the demand of a market and whether you want it picked up, whether you want it delivered, and then the system will load balance where we deem that capacity available. And we're building out that logic based on what we're learning in these tests. So we want to have that point of view clarified early next year, and then you will likely see us start to expand this to other markets over the next 24 to 36 months.

Okay, thank you. Excuse me. So talking about salmon, the menu, and salmon, you know, you've said it's just the beginning of a broader opportunity within seafood maybe could you just expand on that a bit you know one you know how much opportunity is there with the menu in seafood in terms of either standalone products or just your curated offerings which you are already doing with your other proteins and then two just alongside that talk about any gating factors related to introducing complexity to the menu or the operations you know how do you manage those maybe sometimes competing interests?

Yeah, so very excited to have salmon on the menu. Seafood is core of the Mediterranean diet. It continues to broaden out our appeal and being able to welcome more people to our table based on their dietary preferences and needs. My partner, one of my co-founders, Ted Zino-Christos, is our chief concept officer. He leads our culinary innovation team. So we also have roasted garlic shrimp and test and we will see whether we want to hold two seafood items or we rotate one off. We really look at the the protein section or the main section as we call it. We have seven permanent slots and one rotational slot and if a rotational item does exceptionally well it moves into the everyday set it justifies its place there and we optimize one out but we want to stay very disciplined to your point. You know menu creep has been the death knell of many a restaurant brand. So we want to make sure that within our portfolio of choices, we give people significant variety and pulse-consistent newness without over-complicating operations. So when we look at new items, we look at the customer demand. We look at how it fits within the portfolio of the ingredients it's side-by-side with. We look at supply chain and sourcing, and we look at operational complexity. You know, and interestingly, we'll bring back our roasted white sweet potato in January. And this has been a seasonal offering that we brought back multiple times. And the interesting thing about white sweet potato is it's been able to continue to build its constituency because it serves a unique purpose on our menu. 85% of guests that get it, get it as a half and half. So it's a really interesting complementary item to the other means where they'll get half steak, half sweet potato, half chicken, half sweet potato. And so again, all these factors go into how we evolve the menu over time. So we're not so LTO driven as a brand. It's more evolutionary in our menu. And then we look at our categories. So whether that's our bases, we launched our new Power Greens blend earlier this year. It's been very popular. We've got our grains category. We've got our toppings, our dressings. You'll see us come out next month with a new Greek goddess dressing. So we sell a Greek goddess dip in our CPG products and you can get it in Whole Foods. and we're bringing it in as a dressing, and we'll do a few curated items around that. So that's a seasonal pulse, typically one tentpole moment a year. This year it was salmon, bracketed by a couple seasonal moments. And very excited at what Ted and the team have been building for the next three to five years in the culinary pipeline, whether that's the mains or potential complementary beverage. Desserts is another area that I think is probably the weakest aspect of our menu, that we have an opportunity to elevate and level up to the other areas. And then lastly, with the Greek Goddess launch, there'll be another flavor run of a pita chip that was one of our early pita chip flavors that was very popular. We're bringing that back as well as a new house-made juice.

Okay, exciting. And then you mentioned it, but just on garlic shrimp, anything you could offer on what you're seeing in tests? Are you happy with it? How is the guest liking it?

Yeah, very happy. It's been performing well, slightly actually outperforming salmon. And, you know, one of the reasons that we're seeing that is, you know, salmon, given that it's a four-ounce filet, we did not want to serve a half portion. It would be kind of clunky to break it up. And we see that our guests love to mix and match proteins, as I noted with the white sweet potato. So you're able to do that with shrimp, and that gives it more upside potential in that the use case isn't just a single portion that people can opt into it as a half-and-half as well. So it can create even greater usage from a half-and-half perspective.

Okay. Loyalty, digital. I think it was Q4 last year you introduced the three tiers, then you've added a fourth. More recently, Flavor Passport. You've always talked about this as something that would evolve and benefit the business over a long period of time. Are you happy with the progress you're seeing on loyalty over the last 12 months? And then how do you see this evolving, whether it's over the next 12 months or if it makes more sense over a longer period of time?

Yeah, very happy with what we're seeing. We really wanted to build out our first-party audience to create more personalized one-to-one guest relationships. And we've seen the ability to do that and understand their behaviors, their preferences, lookalike customers and guests who may be purchasing similar ingredients that they are not and have a high probability of success suggesting those ingredients to them. And so we've been able to drive improved frequency, broaden out our pool. I think another opportunity as we go to the next phase of the loyalty program is even more personalization and gamification, but also driving more in-restaurant adoption. So at the point of sale better scanning getting people opting in because we see our multi-channel guests have a much higher frequency than someone that's just ordering in the restaurant or just ordering on digitally so how can we influence that behavior as well as things like we know that our most frequent users get a different protein every third visit so how do we encourage folks to try and discover the menu because you know it's human nature and we all and I have a go-to I get my go-to And then when Ted and the team innovate, you know, I'll shift it probably every six months, but people tend to get in their comfort zone as a go-to. But when we're able to encourage our guests to discover more of the menu, we see that driving frequency and ultimately customer lifetime value.

Okay. I wanted to ask about the AGM role. I think it's out to 70% of the system. I think you indicated that was the intended amount in the beginning. You know, one, are you seeing an impact to the operations of the stores where you've put that role in place? And then two, as you evaluate the remaining 30% of stores, what are you looking at to see if it makes sense to add an AGM to those stores as well?

Yeah, we're very pleased with what we're seeing. You've got to remember that the year before we went public, our average unit volume was 2.4 million. Fast forward to today, it's almost 3.1 million. Those are much busier restaurants. And what we were seeing is as it got late at night on the dinner shift, on weekends, we were seeing service quality not to the levels of our peak lunch shifts. And so we said, you know, we wanted to get a stronger management complement and a more seasoned management complement across all 14-day parts, seven lunch and seven dinner, and also serve the purpose of having more role-ready leaders to open those new restaurants we're opening because that's the biggest gating item to our growth. So it was kind of a dual purpose where it helped us broaden and deepen our pipeline of role-ready leaders. And what we're seeing is lower turnover in those restaurants, which is always a good thing. Because lower turnover leads to better guest satisfaction, which ultimately leads to a better traffic in P&L. And then we're seeing also improved guest satisfaction already with it. So very, very excited. And so what we would want to see is that it is justified or worth the investment to take it down to some of those restaurants that may be in the lower quartile of our AUVs. and that we believe that that would help push it up into higher quartiles. Okay.

I'm going to shift over to development. There's an exciting entrant. There will be an entrance into Las Vegas, the Bay Area as well. By definition of being a growth concept, you've been entering new markets for a long time, so that's not new per se. But the question is, with your growing brand awareness, your profile continuing to grow, are there learnings you can take to these new markets? Are you getting better at this? And just any comments on the new markets that are in front of you?

Yeah, we're getting better and better every year and certainly excited about those new markets also entering Minnesota in a couple weeks here, so excited.

Being at Piper Sandler, I should have remembered Minnesota.

Wanted to do a little plug there for you. But we are learning these new restaurants and the markets themselves, not just in new markets, but across all of our markets. So the past couple years, our restaurants are performing at significantly higher volumes than we were anticipating. And so there have been some adjustments that we've made in anticipation of that. And so one of the things we started doing earlier this year is actually opening those restaurants without third-party delivery. And one of the reasons for that is, you know, the restaurants with big volumes wanting to make sure that we're giving our teams the right footing to be able to deliver an amazing guest experience and avoid the delivery drivers in your face with their phones, like, what's going on? Where's my order? And so that's one of the things that we've put in place, and we've also leaned into training in a more thoughtful way. And so bringing on general managers three months ahead, we typically brought them in three months early, now bringing them in six months early, so they can experience a new restaurant opening that's not their own before they have their own, as well as working in a high-volume location so that they're better prepared. All of that helps us situate ourselves in a much better position as we go into these new markets to continue to propel the brands and really underscore the white space opportunity that we have. So one of the things we've not done is lean more into marketing. So certainly an opportunity for us there, but, again, given those strong volumes, reserving the right to do that in the future if we need to.

And then, Tricia, can you update us or remind us on the new stores how those are coming into the base? my last understanding maybe months 13 through 18 or maybe they're a drag same sort of sales but then they flip positive after that and it becomes a tail end so I just wanted to ask I think you shared class of 2024 is now comping up double digit so just help level set and where this stands class of 25 and 26 and how you're thinking about that.

Yep and you're thinking about it right. I'll go back a little bit in history so if you prior to the class of 2024 when we went public We anticipated restaurants would open at 2.1 million, then grow 10% the first year of the same restaurant sales, and then 6% to 8%, and then around mid-single-digit thereafter. What we started learning with those restaurants in the 2024 vintage themselves is they were performing at 100% productivity, so way outpacing our expectations and, in fact, delivering on year two economics and year one, so driving much higher revenues and greater cash-on-cash returns much earlier. What that meant was a little bit of a headwind as they came into the same restaurant sales base, but as they turned, as you said, into the 18th month, delivering positive same restaurant sales, and in fact, those restaurants in 2026 this past quarter had double-digit sales growth in that vintage. 25 appears to be performing in a similar fashion, so modeling what we saw in 24 and 26, also performing outbasing our expectations above our targets and delivering 100% productivity, but the curve seems to be less steep, so a little bit of that honeymoon experience based on some of the factors that I mentioned earlier, not turning on 3P right away, making sure the restaurant is as prepared as they possibly can be for those high volumes. And so it's a bit early now and a small sample size to say what those will look like in the future, but we'll keep a close eye on it. Overall, as we think about new restaurant openings, we think about them in terms of 90% productivity and how that might mature over time, be more like what it was in history. But pleased with the performance in those cash-on-cash returns and the value we're generating right now.

Okay. Thank you, Tricia. That helps, I think, everyone. Thank you. And then back to Brett, you've been saying, I love this quote, but you've seen the death of the dining room is a myth since I first met you a few years ago. So related to that, maybe remind us the original thinking behind Project Soul. Has that been a worthwhile initiative internally? And how do you see the Cava dining room evolving over time? And how important is it to you in the role where you see Cava in the future?

Yeah, I think you're seeing it play out in real time. you've seen a lot of QSRs note the challenge of their kiosks and the impersonal nature of it. Look, sharing a meal is the oldest social act known to humankind. You know, in a world where screens continue to proliferate our everyday life and disintermediate human connection, an abundant intelligence AI is going to continue to potentially exacerbate that. People are craving human connection. They're craving being with people. But you have to give them a space that's evocative of that, an aesthetic that's comfortable, even if it's for a 20, 25-minute meal. And frankly, we think part of our brand essence in our Mediterranean way isn't just the great food where unique cuisine where taste and health unite. It is that commensality, that hospitality you get when you experience and you go to that part of the world that my co-founders are from and their families are from. And that inviting, welcoming atmosphere. And so we want to do it with our team members, but we also want to do it with the space that you're dining in. So we invested in, you know, we updated our brand palette with a warmer, more vibrant brand palette, warmer lighting, more greenery, softer seating, and it's great. Like, just anecdotally, you know, we do a shoulder-to-shoulder shift in our restaurants every quarter. So I worked in our Foggy Bottom restaurant about five weeks ago. And I'm working the line, and I see three gentlemen, you know, ordering to go their lunch. They're going down the line. The guy gets to the end, he stops, he looks around. Our dining room is probably, you know, 80% full. He's like, says to his friends, hey, you guys want to sit down and eat here? They're looking around. They're like, yeah, let's eat here, right? Because people don't want to always have to just take their bowl and go back to their apartment, go back to their little cubicle or their desk. And if you give them a reason and a place, and so for us, it's not an either or. We have great digital channels. We have our own digital order platform. But for us, it's an and. We want great digital channels and great physical channels. And we know, as I said earlier, our multi-channel guests are more frequent users. And so we're just availing ourselves to more occasions from more people.

Well, thank you, Brett. We're out of time. It's a great place to leave it. Thank you both for being here.

Thank you.