On this page of StockholderLetter.com we present the latest annual shareholder letter from CAVA GROUP, INC. — ticker symbol CAVA. Reading current and past CAVA letters to shareholders can bring important insights into the investment thesis.
2023 ANNUAL REPORT

BRETT SCHULMAN, CO-FOUNDER AND CEO
Fellow shareholders,
Clarity. If I had one word to sum up the CAVA journey,
reflecting on the past year and the road ahead, it would
be clarity.
As we emerge from a transformative period in which
we completed a successful IPO, the strength and potential
of our business is clear. We are incredibly proud of all we
have accomplished to date and continue to be guided by
the values of hospitality, our commitment to welcoming
everyone to our table, and our desire to share our unique
Mediterranean cuisine with communities across the country. In the first year as a public company, we:
Drove a nearly 60% increase in
CAVA revenue.
Grew CAVA same-restaurant
sales by 17.9%, including a 10.4%
increase in traffic.
Opened 72 net new restaurants,
ending the year with 309
restaurants and a presence in 24
states and the District of Columbia.
Generated adjusted EBITDA of
$73.8 million, a $61.2 million
increase over 2022.
Delivered three consecutive quarters
of positive net income.
A LETTER FROM
OUR CO-FOUNDER
AND CHIEF
EXECUTIVE
OFFICER
As I told the team the night before our IPO, going
public was not the destination; it was the beginning of
our next chapter. Our success at CAVA means more
than just meeting our current goals or hitting target
metrics in a given year. We believe success is a commitment to ongoing transformation and a deep understanding of our customers. By looking ahead and proactively
gauging future trends, we can ensure that our growth
is sustained, meaningful, and aligned with our mission
of bringing heart, health, and humanity to food. This
approach allows us to thrive in an ever-evolving world,
and the road ahead is clear.
Fourteen years ago, it was evident to us that our Mediterranean Way needed to be shared across the country. While our food and format catalyzed our success
with its inherently innovative way of individualizing our
unique Mediterranean cuisine to make it widely accessible, our strategic decisions have since propelled CAVA,
allowing us to emerge as a category-defining brand as
we accurately identify trends or set trends ourselves.
In our earliest days, we recognized the growing
adoption of digital tools that consumers were using
to engage with brands. Whether it was launching
a mobile payment and loyalty app in 2013, adding
second, dedicated digital order makelines to restaurants in 2015, building our own digital platform in
2017, starting to construct digital drive-thru pick-up
lanes in 2018, deploying digital menu boards in new
restaurants in 2021, or re-building our digital order
platform to a highly scalable microservices architecture
in 2022, we have constantly positioned our business to
meet the changing needs of our guests and our team
members.Today, approximately 35% of our revenue
comes through digital channels. In the process of that
decade-long digital transformation journey, we recognized population migration trends towards the Sunbelt
and the suburbs, a recognition that led to our Coastal
Smile real estate strategy and our strategic acquisition
of Zo  s Kitchen in 2018, an unconventional decision
at the time, growing our footprint in prime real estate
where consumers converged, well ahead of our competitors. Now, having established the foundation of our
multi-channel format, coast to coast, across 25 states
and the District of Columbia, in both urban and suburban markets, our sights are set on building upon that
foundation to capitalize on emerging trends.
In that spirit, I   d like to discuss our updated strategic
plan for 2024, rooted in four pillars, and how it positions CAVA to be ahead of the next emerging trends we
see taking hold.
1. Expand our Mediterranean Way
in communities across the country.
With every restaurant we open, we get stronger. Across
new and existing markets, we have yet to find a market that doesn   t love CAVA, and we plan to grow our
national footprint by 15% this year and next. Building
Chef-Curated Greek Salad
on the success of our Coastal Smile strategy, we see new
opportunities in an area of the country where we have previously not existed, the Midwest. We entered this space
in April with our first of many planned restaurants in the
Chicago market and received the usual warm welcome.
In the post-pandemic, post-inflationary landscape, we
are seeing a convergence of segments across the restaurant industry. The move away from traditional full-service
chains suggests that these legacy formats are struggling
to deliver a relevant value proposition to the modern
consumer; the restrictive mechanics of these traditional
full-service formats inhibit their ability to deliver quality
food and flavor at a reasonable total cost, convenience
of time, or differentiation of experience, and often leaves
guests    changing needs unsatisfied. Likewise, we have
seen an increased movement toward fast-food establishments driven by price and convenience. Yet, these choices
are frequently unhealthy and unsatisfying, dominated by
kiosks and drive-thrus that focus on transactions rather
than human connection.
We believe serving the consumer of today and tomorrow
is not an    either-or    proposition but instead an    and.    At
a time when people want the convenience of quick service
but also crave human connection, CAVA occupies a distinctive space. Through our Project Soul initiative, we   re
elevating the warmth and experience in our physical channel, creating warm, inviting dining rooms where people
can gather. These are complemented by our robust digital
channels, letting guests engage with us across multiple
occasions and their channel of choice.
Group settings, small and large, offer another opportunity to meet our guests on their terms. We see catering
as an exciting way to extend our hospitality and reach beyond the four walls of our restaurants, and we are working on optimal ways to bring it to consumers. This year,
we will continue our test of multiple production formats,
including Digital Kitchens and Hybrid Kitchens, for centralized hub production, along with traditional restaurant
production where capacity allows. These tests will inform
how we successfully launch and grow a full-scale catering
program, presenting an attractive channel growth opportunity in the years to come.
Shifting to culinary innovation, our food has always
been among our greatest strengths, and we continue to
develop unique menu items that express our Mediterranean spirit, invite people into CAVA, and keep them
coming back. This year, we will launch a new    main,   
Grilled Steak. We have not had a beef item on our menu
since January of last year, a perceived gap by our guests,
and we have created a product high in protein and rich
in flavor, with the brightness of sun-dried tomato, herby
oregano, and a touch of red chili for fruity heat. Our menu
has something for everyone, and Grilled Steak offers yet
another way to meet our guests    tastes and preferences
while making our already strong dinner occasion even
more relevant.
2. Develop personal relationships
with guests, even as we scale.
We   re not just in the restaurant business; we   re in the
hospitality business, and the bigger we get, the more
we want our guests to feel like we woke up that morning just to serve them.
In a service-oriented economy, technology is making
consumer touchpoints increasingly transactional, and
brands risk over-indexing on removing friction and,
as a byproduct, removing the joy from the experience.
Against that backdrop, we look to use technology to
enhance the human experience, not replace it. We   ve
created a robust digital ecosystem over the past ten
years, and building upon that foundation, we believe
we are on the precipice of another decade of transformation, this time data transformation. With the
advent of third-party privacy regulations, growing our
audience of first-party data and building one-to-one
lines of communication with our guests is imperative.
We believe there is a significant opportunity to leverage
this data to create deeper, more personal relationships
with our guests, even as we scale. Creating one-to-one
lines of communication helps us share our Mediterranean warmth and hospitality no matter how they
choose to engage with us, in personalized ways, and
seamlessly deliver a cohesive brand story on our app,
web, and in-restaurant digital menu boards while giving
us the flexibility to adapt to local markets.
As the next step of this data transformation, we plan
to re-launch a reimagined loyalty program, currently in
test, later this year. This program lays a foundation to
create truly personalized experiences and differentiated, thoughtful moments, deepening guests    connection
to CAVA and driving frequency, mix, and check.
3. Run great restaurants, every
location, every shift.
As we grow, so does our focus on running great restaurants.
Scaling restaurants is notoriously challenging. It is
why we have invested in and continue to invest in operational infrastructure to scale successfully.
Food safety is a vital piece of CAVA   s infrastructure.
Our Critical Four initiative further strengthens food
safety processes and training, and as part of this work,
we   ve implemented more frequent, stringent restaurant
audits and shifted to a new third-party auditor.
Earlier, I mentioned being on the precipice of a
decade-long data transformation opportunity. This
opportunity permeates through multiple pillars of our
strategic plan. Our Connected Kitchen initiative, another aspect of data transformation, is a multi-year project
focused on exploring and implementing data-driven
Edgewater, New Jersey
and generative AI technologies that can tell our teams
exactly how much food to prep or cook in real-time,
drive quality consistency, increase order accuracy, and
boost speed of service. The right data, used the right
way, can free team members from menial tasks and
simplify the complexities of operations, inventory, and
scheduling management. By extension, we can improve
quality, mitigate food waste, and allow our team members to focus on great food and great service, driving
deeper connections with guests. Ultimately, this makes
it easier for our employees to do their jobs successfully
and deliver on our mission to bring heart, health, and
humanity to food.
Utilizing automation, we are taking the complexity
out of the four walls of our restaurants and are able to
deliver our culinary excellence at scale, both of which
are vital to running great restaurants in every location
and every shift. We have made significant investments
in automated infrastructure over the years, and at the
end of 2023, we completed the construction of our
new state-of-the-art, 55,000-square-foot production
facility in Verona, Virginia. The facility is operational,
and we are ramping up production at Verona alongside
existing production at our Laurel, Maryland facility. This
vertically integrated production capability allows us to
produce our unique dips and spreads with differentiated
 • shareholder letter icon 4/29/2024 Letter Continued (Full PDF)
 • stockholder letter icon More "Hotels" Category Stockholder Letters
 • Benford's Law Stocks icon CAVA Benford's Law Stock Score = 82


CAVA Shareholder/Stockholder Letter Transcript:

2023 ANNUAL REPORT


BRETT SCHULMAN, CO-FOUNDER AND CEO
Fellow shareholders,
Clarity. If I had one word to sum up the CAVA journey,
reflecting on the past year and the road ahead, it would
be clarity.
As we emerge from a transformative period in which
we completed a successful IPO, the strength and potential
of our business is clear. We are incredibly proud of all we
have accomplished to date and continue to be guided by
the values of hospitality, our commitment to welcoming
everyone to our table, and our desire to share our unique
Mediterranean cuisine with communities across the country. In the first year as a public company, we:
Drove a nearly 60% increase in
CAVA revenue.
Grew CAVA same-restaurant
sales by 17.9%, including a 10.4%
increase in traffic.
Opened 72 net new restaurants,
ending the year with 309
restaurants and a presence in 24
states and the District of Columbia.
Generated adjusted EBITDA of
$73.8 million, a $61.2 million
increase over 2022.
Delivered three consecutive quarters
of positive net income.
A LETTER FROM
OUR CO-FOUNDER
AND CHIEF
EXECUTIVE
OFFICER
As I told the team the night before our IPO, going
public was not the destination; it was the beginning of
our next chapter. Our success at CAVA means more
than just meeting our current goals or hitting target
metrics in a given year. We believe success is a commitment to ongoing transformation and a deep understanding of our customers. By looking ahead and proactively
gauging future trends, we can ensure that our growth
is sustained, meaningful, and aligned with our mission
of bringing heart, health, and humanity to food. This
approach allows us to thrive in an ever-evolving world,
and the road ahead is clear.
Fourteen years ago, it was evident to us that our Mediterranean Way needed to be shared across the country. While our food and format catalyzed our success
with its inherently innovative way of individualizing our
unique Mediterranean cuisine to make it widely accessible, our strategic decisions have since propelled CAVA,
allowing us to emerge as a category-defining brand as
we accurately identify trends or set trends ourselves.
In our earliest days, we recognized the growing
adoption of digital tools that consumers were using
to engage with brands. Whether it was launching
a mobile payment and loyalty app in 2013, adding
second, dedicated digital order makelines to restaurants in 2015, building our own digital platform in
2017, starting to construct digital drive-thru pick-up
lanes in 2018, deploying digital menu boards in new
restaurants in 2021, or re-building our digital order
platform to a highly scalable microservices architecture
in 2022, we have constantly positioned our business to
meet the changing needs of our guests and our team
members.Today, approximately 35% of our revenue
comes through digital channels. In the process of that

decade-long digital transformation journey, we recognized population migration trends towards the Sunbelt
and the suburbs, a recognition that led to our Coastal
Smile real estate strategy and our strategic acquisition
of Zo  s Kitchen in 2018, an unconventional decision
at the time, growing our footprint in prime real estate
where consumers converged, well ahead of our competitors. Now, having established the foundation of our
multi-channel format, coast to coast, across 25 states
and the District of Columbia, in both urban and suburban markets, our sights are set on building upon that
foundation to capitalize on emerging trends.
In that spirit, I   d like to discuss our updated strategic
plan for 2024, rooted in four pillars, and how it positions CAVA to be ahead of the next emerging trends we
see taking hold.
1. Expand our Mediterranean Way
in communities across the country.
With every restaurant we open, we get stronger. Across
new and existing markets, we have yet to find a market that doesn   t love CAVA, and we plan to grow our
national footprint by 15% this year and next. Building
Chef-Curated Greek Salad
on the success of our Coastal Smile strategy, we see new
opportunities in an area of the country where we have previously not existed, the Midwest. We entered this space
in April with our first of many planned restaurants in the
Chicago market and received the usual warm welcome.
In the post-pandemic, post-inflationary landscape, we
are seeing a convergence of segments across the restaurant industry. The move away from traditional full-service
chains suggests that these legacy formats are struggling
to deliver a relevant value proposition to the modern
consumer; the restrictive mechanics of these traditional
full-service formats inhibit their ability to deliver quality
food and flavor at a reasonable total cost, convenience
of time, or differentiation of experience, and often leaves
guests    changing needs unsatisfied. Likewise, we have
seen an increased movement toward fast-food establishments driven by price and convenience. Yet, these choices
are frequently unhealthy and unsatisfying, dominated by
kiosks and drive-thrus that focus on transactions rather
than human connection.
We believe serving the consumer of today and tomorrow
is not an    either-or    proposition but instead an    and.    At
a time when people want the convenience of quick service
but also crave human connection, CAVA occupies a distinctive space. Through our Project Soul initiative, we   re
elevating the warmth and experience in our physical channel, creating warm, inviting dining rooms where people
can gather. These are complemented by our robust digital
channels, letting guests engage with us across multiple
occasions and their channel of choice.
Group settings, small and large, offer another opportunity to meet our guests on their terms. We see catering
as an exciting way to extend our hospitality and reach beyond the four walls of our restaurants, and we are working on optimal ways to bring it to consumers. This year,
we will continue our test of multiple production formats,
including Digital Kitchens and Hybrid Kitchens, for centralized hub production, along with traditional restaurant
production where capacity allows. These tests will inform
how we successfully launch and grow a full-scale catering
program, presenting an attractive channel growth opportunity in the years to come.
Shifting to culinary innovation, our food has always
been among our greatest strengths, and we continue to
develop unique menu items that express our Mediterranean spirit, invite people into CAVA, and keep them
coming back. This year, we will launch a new    main,   
Grilled Steak. We have not had a beef item on our menu
since January of last year, a perceived gap by our guests,
and we have created a product high in protein and rich
in flavor, with the brightness of sun-dried tomato, herby
oregano, and a touch of red chili for fruity heat. Our menu
has something for everyone, and Grilled Steak offers yet
another way to meet our guests    tastes and preferences
while making our already strong dinner occasion even
more relevant.

2. Develop personal relationships
with guests, even as we scale.
We   re not just in the restaurant business; we   re in the
hospitality business, and the bigger we get, the more
we want our guests to feel like we woke up that morning just to serve them.
In a service-oriented economy, technology is making
consumer touchpoints increasingly transactional, and
brands risk over-indexing on removing friction and,
as a byproduct, removing the joy from the experience.
Against that backdrop, we look to use technology to
enhance the human experience, not replace it. We   ve
created a robust digital ecosystem over the past ten
years, and building upon that foundation, we believe
we are on the precipice of another decade of transformation, this time data transformation. With the
advent of third-party privacy regulations, growing our
audience of first-party data and building one-to-one
lines of communication with our guests is imperative.
We believe there is a significant opportunity to leverage
this data to create deeper, more personal relationships
with our guests, even as we scale. Creating one-to-one
lines of communication helps us share our Mediterranean warmth and hospitality no matter how they
choose to engage with us, in personalized ways, and
seamlessly deliver a cohesive brand story on our app,
web, and in-restaurant digital menu boards while giving
us the flexibility to adapt to local markets.
As the next step of this data transformation, we plan
to re-launch a reimagined loyalty program, currently in
test, later this year. This program lays a foundation to
create truly personalized experiences and differentiated, thoughtful moments, deepening guests    connection
to CAVA and driving frequency, mix, and check.
3. Run great restaurants, every
location, every shift.
As we grow, so does our focus on running great restaurants.
Scaling restaurants is notoriously challenging. It is
why we have invested in and continue to invest in operational infrastructure to scale successfully.
Food safety is a vital piece of CAVA   s infrastructure.
Our Critical Four initiative further strengthens food
safety processes and training, and as part of this work,
we   ve implemented more frequent, stringent restaurant
audits and shifted to a new third-party auditor.
Earlier, I mentioned being on the precipice of a
decade-long data transformation opportunity. This
opportunity permeates through multiple pillars of our
strategic plan. Our Connected Kitchen initiative, another aspect of data transformation, is a multi-year project
focused on exploring and implementing data-driven
Edgewater, New Jersey
and generative AI technologies that can tell our teams
exactly how much food to prep or cook in real-time,
drive quality consistency, increase order accuracy, and
boost speed of service. The right data, used the right
way, can free team members from menial tasks and
simplify the complexities of operations, inventory, and
scheduling management. By extension, we can improve
quality, mitigate food waste, and allow our team members to focus on great food and great service, driving
deeper connections with guests. Ultimately, this makes
it easier for our employees to do their jobs successfully
and deliver on our mission to bring heart, health, and
humanity to food.
Utilizing automation, we are taking the complexity
out of the four walls of our restaurants and are able to
deliver our culinary excellence at scale, both of which
are vital to running great restaurants in every location
and every shift. We have made significant investments
in automated infrastructure over the years, and at the
end of 2023, we completed the construction of our
new state-of-the-art, 55,000-square-foot production
facility in Verona, Virginia. The facility is operational,
and we are ramping up production at Verona alongside
existing production at our Laurel, Maryland facility. This
vertically integrated production capability allows us to
produce our unique dips and spreads with differentiated



shareholder letter icon 4/29/2024 Letter Continued (Full PDF)
 

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