Can Cava Become the Chipotle of Mediterranean Food? | WSJ The Economics Of

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Mediterranean fast-casual food (00:00:00)

Fast casual chain Cava has grown into a nearly $4 billion business.
Cava acquired a competitor four times larger and converted its locations.
The goal is to be the largest Mediterranean chain in the US, similar to Chipotle's position a decade ago.
Success relies on the lasting popularity of the Mediterranean diet.
Cava uses customer data to strategize new location openings, moving beyond acquisition-driven growth.

Cava favors suburban expansion where Mediterranean options may be limited.
A robust real estate model incorporating demographics helps identify optimal locations.
In 2018, Cava acquired Zoe's Kitchen, which was financially struggling.
Zoe's lack of focus and menu clarity became a warning for Cava's brand focus on modern Mediterranean flavors.
Most new Cava restaurants between 2019 and 2023 were converted Zoe's Kitchen locations, allowing for cost-effective expansion.
Converting existing Zoe's locations helped Cava grow quickly in new regions.
After converting the last Zoe's Kitchen in October 2023, Cava will now have to build new restaurants from scratch.

Cava operates in 24 states plus Washington, D.C., and went public in June 2023.
Seeks to benefit from the Mediterranean diet's popularity to attract a wide customer base.
Mediterranean cuisine makes up only 1.4% of US restaurants.
Cava reported a net income of $6.8 million with a 25.1% profit margin at the restaurant level.
As the largest Mediterranean restaurant chain in the US, Cava is compared to Chipotle.
Chipotle was a pioneer in fast casual dining with less competition, whereas Cava faces more competitors.
Success may depend on customers' sustained interest in Mediterranean food, which is still seen as new in many areas.