Dive Brief:
- Cava will launch grilled steak across its system on Monday, CEO and co-founder Brett Schulman said Tuesday during an earnings call.
- The company has been working on grilled steak for two years and has tested it in Boston and Dallas since early December, he said.
- Grilled steak will fill a “perceived gap” in its offerings after Cava took beef meatballs off the menu over a year ago. It will also enhance its dinner daypart, which makes up about 46% of its sales mix, he said.
Dive Insight:
In market tests, Cava has seen a positive sales mix from grilled steak. The company’s same-store sales annual guidance of 4.5% to 6.5% growth includes the expected impact of its steak rollout, CFO Tricia Tolivar said during the call.
“We expect steak to provide a tail into comp sales, while delivering consistent penny profit,” Schulman said.
The grilled steak is grass-fed, pasture-raised and seasoned with sun-dried tomatoes, oregano and Aleppo pepper, Schulman said. The company will price the menu item to protect penny profit instead of percentage profit, which could translate into higher cost of goods for the rest of the year, Sharon Zackfia, analyst at William Blair, said in a report emailed to Restaurant Dive.
During Q1, same-store sales were up 2.3%, which includes a 3.5% increase from menu price and product mix that was partially offset by a traffic decline of 1.2%, Tolivar said.
Other fast casual chains have been adding steak to the menu. Sweetgreen added steak in early May to its core menu after testing it in Boston, where steak made up almost one-fifth of dinner orders. Chipotle’s LTO carne asada outperformed the company’s expectations last year, driving demand and incremental transactions.
