Brett Schulman is pursuing a career in food finance.
Source: Cava
Guess who’s moving to the suburbs now?
The Covid-19 pandemic has set in motion several trends that could change the restaurant space even after the widespread administration of vaccines and life returns to a new normal. From the migration from dense cities to suburbs, to a greater dependence on digital orders for lifting, curb and delivery, the space continues to evolve, and the Mediterranean chain Cava is based on all of the above.
The restaurant’s father, Cava Group, acquired Zoe’s Kitchen at the end of 2018, becoming a private company. The group said its new 288-store real estate portfolio allows it to expand faster into new suburban markets because it can turn 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 company in Washington, DC, made seven conversions of Zoe locations and there are 12 under development by 2021. About 80% of Cava sites are in suburban markets.
“We see the ability to unlock a significant increase in revenue in Zoe’s properties when we convert them to a Cava location,” Schulman said. As a private company, Cava does not publicly report its annual revenues.
Cava, which also has a consumer packaging business that sells dives and spreads to Whole Foods and other specialty markets, has seen its business in restaurants move from a concentrated lunch to dinner, the CEO said. Brett Schulman for CNBC.
“When you serve a suburban client, whether it’s a family or a couple or single people living in the suburbs, [you need] be relevant to their needs at both lunch and dinner. I think this is very important when you are in the suburbs, “he said.
Cava is not the only chain looking for opportunities in the suburbs. Chipotle has been successful with “Chipotlanes,” the lanes reserved for mobile orders, and sees 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 bands.
Shack Shack recently stated in its revenue report that suburban shacks behave better than those located in cities. And Starbucks is expanding its drive-thru portfolio in the coming years, as it closes some low-performing locations and opens new, smaller pickup stores in cities and drive-thrus in suburbs.
“Digital agility”
Cava also has a second digital and extra-premise kitchen in every restaurant dedicated to preparing food for online orders, which Chipotle became known for as its digital business grew.
Digital revenues at Cava have increased 140 percent year-over-year, and 30 percent of total revenue comes from non-pre-Covid digital channels, including on-board delivery, Schulman said.
“I think that was one of the things we were able to do, we have what I call ‘digital agility’ in Covid. We have a team of in-house engineers and those capabilities have allowed us to quickly support those channels and create those access points based on the needs of Covid consumers, “he said.
And the brand is poised for a return to on-site nutrition later this year, but Schulman expects to be in all locations – on-site and online – will help strengthen the consumer experience.
“We really focused on hospitality, it’s an essential aspect of our brand and the people who have that commitment go in line with the members of our team. [in stores] and combining those physical and digital channels. So, whether you want to engage with us through our digital channels or through our physical channels, hospitality is at the heart of it, ”he said.