Dive Brief:

• Cava captured whopping revenue gains of 52% in Q4 and almost 60% for FY2023 despite increased labor investments, the company announced in an earnings release Tuesday. 
• The Mediterranean chain’s “particularly affluent visitor bases” were likely more insulated from last year’s economic challenges than the average consumer, per a Placer.AI report, which probably supported its 30% unit growth year-over-year, and a 5.2% same-store traffic bump in Q4.
• Cava wants to boost 2024 sales by attracting more dine-in traffic, which makes up 64% of orders, with its newly launched “Project Soul” restaurant design update, CEO Brett Schulman told investors. These store changes will create “a more inviting physical space,” including softer seating and a new color palette. 

Dive Insight:

Cava’s plan to enhance its dining rooms builds on existing design-focused initiatives, including the development of hybrid kitchen store models that use an extra 300 square feet of kitchen space to serve as catering hubs. Schulman said Project Soul changes will not include footprint expansions, but will instead focus on ambiance to convince more consumers to dine-in.

Cozier in-restaurant seating areas can support Cava’s efforts to deepen diner loyalty by “creating a cohesive physical and digital journey for guests, driven by a reimagined loyalty program and using our digital ecosystem for one-to-one communication,” Schulman said. The chain launched an updated loyalty pilot in Houston last year to experiment with new rewards and touchpoints with customers, and changed its existing program’s redemption structure from a dollar-based, spend-X-get-Y scheme to a bankable points model. 

“We believe this work can further strengthen our value proposition, powerfully express our brand across multiple touchpoints, and create differentiated thoughtful moments that make the CAVA experience stand out,” he added. 

This focus on dine-in experience is a bit of a departure from category trends, with QSRs and fast casuals alike emphasizing the convenience of their drive-thru and digital channels and growing dining room-free store counts to accommodate on-the-go guests. 

Cava’s restaurant traffic outpaced overall fast causal category traffic by a wide margin in Q4 2023 and in January, according to Placer.AI data. Last month, the chain posted year-over-year traffic gains of 18.4%, compared to an 8% traffic dip for the category. Rival Sweetgreen, which is automating its makelines to increase throughput, captured YOY traffic gains of more than 22% for January. 

Cava launched an initiative called Connected Kitchen that uses “predictive scheduling, predictive prep, [and] predictive cook batching through the use of data and AI models” to boost productivity, Schulman said. 

Schulman anticipates that Connected Kitchen will be a “multi-year journey” that “will make our restaurants easier to operate, drive improved general efficiency and effectiveness, and enhance the guest experience.”

Despite its focus on in-restaurant experience, the chain wants to continue strengthening its digital channels, including its mobile pickup lanes. Cava has 31 such lanes in operation, CFO Tricia Tolivar said on the call, which supported the chain’s roughly 36% digital revenue mix for Q4.