CAVA CEO on Winning Customers, Vertical Integration, and Riding the Mediterranean Wave

We think Mediterranean is the next large scale cultural cuisine category. As the US consumer looks beyond the mature categories of Asian, Italian, Mexican

Foot traffic is slowing down across much of the vast casual space with brows like Chipotle and Sweet Green reporting, flat or negative, same restaurant sales as consumers slow their discretionary spend, Carver is one of the few players reporting same restaurant sales growth, mainly thanks to increased customer traffic and not price hikes. The vast casual Mediterranean restaurant chain offers customizable bowls, Peters and salads and Q1 2025 was a busy one for Carver. The company opened 15 new locations bringing its total count to over 380 restaurants across 26 states, and it grew sales just over 28% year over year hitting a milestone, $1 billion in trailing revenue all while maintaining unit level margins above 25%. It's a solid performance, but market expectations have been high. As of recording, Carver shares are trading at a price to earnings ratio of over 130 times. We sit down with CEO Brett Schulman to explore how Carver is navigating consumer uncertainty and the pressure it faces to deliver the stock market's desired growth. Let's get into it. Wow. Brett, thank you so much for joining and I'm really excited to dig in to the following. When I take a look at your fast casual competitors and the overall landscape, we've seen flat to down same store sales numbers reported by several of your peers. So tell us what is it that car is doing differently? Why are you up when so many others are not? Well,

Great to be with you and really proud of the quarter of the team is able to deliver including 7.5% same restaurant traffic as a component of that over almost 11% same restaurant sales. And I think it's really a testament to the growing appeal of Mediterranean cuisine and the way our team is able to deliver that with our Mediterranean hospitality. It's the idea where we welcome everyone to the table and our spirit of generosity and the value proposition we've tried to really invest in over the last few years. When you think about it, in recent years, we've been able to underprice inflation by 800 basis points under price CPI, and that's compared to many in the limited service space that have taken price upwards of 30 plus percent. So that's only enhanced our relative value proposition. When you combine that price value with the way you can access our food, the convenience in which you can access our food, the relevance of our cuisine, the quality of our ingredients, and then that experience you have that hospitality I mentioned earlier, that all comes together I think to really resonate and meet the needs of a modern consumer where they're feeling pressures all around them.

I want to push a little bit on this idea of the rise of Mediterranean food because Carver has come to be emblematic of the consumer interest in the healthy Mediterranean diet and the way of living you are winning right now. The market's expecting you to keep winning. When I look at where you're trading right now, Brett, you are north of 130 times price to earnings multiple. That's a pretty hefty expectation that's implied there with respect to your investors anticipating growth. But how much do you worry that someone's going to pop up and start biting away at your ankles when it comes to Mediterranean? If we look at other concepts, whether it's Mexican food, whether it's salads, whether it's pizza, multiple players have ended up being there at scale over time. You haven't seen it Mediterranean yet, but is it coming?

Yeah. Well it's interesting because everybody's fighting for stomach share. You can even look at grocery stores, you can look at convenience stores. But what we see over time, when you just look at the birth of fast casual as a segment, right? You've got casual dining, you've got QSR below us, traditional fast food and fast casual about 30 years ago started to emerge as this segment in between and now that's grown to be a pretty massive segment and we even see what we call segment convergence, where they're blending where people are trading down or casual dining starting to merge into full service and QSR into fast casual and casual dining coming into fast casual and you're seeing casual dining shrink as a segment. You're seeing fast casual continue to grow as a segment and as fast casual grows, we think the next frontier of fast casual is it's breaking into large cuisine niches and we think Mediterranean is the next large scale cultural cuisine category.

(04:26)
As the US consumer looks beyond the mature categories of Asian, Italian, Mexican. And you think about why that's happening, and we noted this around our IPO and NRS one, these large scale secular trends where you have a growing diversity in the country. So roughly around 48% of millennials identify with an ethnic minority group, or sorry, gen Z, identify with an ethnic minority group that's up from 39% of millennials. Gen alpha will be the first generation across that 50% paradigm. And what we see, what we know is that as the country is getting more diverse, people's pals are shifting, they're seeking bolder, more adventurous flavors. And when you pair that with increasing interest in modern health and wellness trends and you think of the rise of LPs and people really becoming more educated about what they're consuming, what the impact it's having on their body, when you pair those trends, that's where our Mediterranean cuisine comes in. It's at the convergence of those trends. It's that unique cuisine where taste and health

Unites. I will say in preparation for our conversation, I did go to my nearest carver and I had a harissa avocado bowl and talk about bold flavor. It definitely had some kick to it. The spice factor was up there, which was very delicious. But let's talk about format. You raised guidance to open up to 68 new restaurants this year, so significant growth in your number of your locations. Talk to us about your thinking strategically with respect to what those locations should look like. Again, if I look at some of your competitors, there's been a rise, for example, in drive-throughs, there's been a lot more focus on takeout and ordering digitally and folks being able to get delivery. Talk to us about how your customer is consuming carver and where are they consuming carver?

Yeah, this is the beauty of the opportunity for us and why our white space opportunity is so significant because the way that we are able to appeal in so many different aspects. So we've got about a 54, 46 lunch dinner split. So we cook with fire, we grill, we roast and we braise. So we're not just an intuitive choice at lunch, we're an intuitive choice at dinner. When you look at our top quartile of restaurants or even our top decile, it's not one specific type of unit. It's everything from a suburban end cap grocery anchored shopping center to an urban site with some residential and office to a college adjacent site to an ex-urban site with a pickup by car lane. So we have 59 locations now that have a drive-through pickup window in addition to the dining room, but you pick up the digital order in the window versus picking up off the shelf some of our other restaurants.

(07:13)
And so what that allows us to do is really meet the needs of consumers in so many different ways in different occasions. And that's really translated to our 26 state footprint and the district of Columbia. We work in the city, we work in the suburbs, we work in the exurbs. And so what we do is we take this core format and then we do derivations of it based on the on-premises and the off-premises demand. So for example, in Manhattan where you are, we have a location that doesn't have any seats. It has multiple digital make lines because it does over 50% in digital order. And we have a location in the suburbs that does similar revenue and these are pretty high volume revenue locations that does about 20, 25% digital and has 70 seats in the dining room and they're all full at lunch and dinner. So it just really is trying to adjust our format to the needs of the consumers in those neighborhoods or trade areas that they're trafficking us in and really giving them what we like to say is the remote control to our brand create this multi-channel offering that they can choose the channel of choice that they want to opt in depending on what their needs are and where they are in the world because we see our core guests really opting into multiple channels over the course of a week.

Who is your core guest, Brett? And here's the reason I ask that question. Consumers, depending on what you read in the aggregate, they seem to be a little bit challenged at the moment. And I actually did see your chairman, I saw Ron, she can see NBC a couple of weeks ago saying he really believes we're in a period now of stagflation, which is a period that is typically very difficult for consumers and for consumers'. Discretionary spend dining out tends to be one of the first things that consumers cut, and yet you guys seem to be doing pretty well. So who is your customer? Are they more immune from the kinds of pressures that consumers are seeing average or are you doing something differently? That means your customers are going to keep hanging onto you even if they're feeling budgetary pressure themselves?

Yeah, I think it's the value proposition I spoke to earlier that we've been able to lean into that even as they're feeling pressure around them, they're still finding value and the opportunity to d kava. There's no question that consumers are facing increasing headwinds. I mean you're seeing it all around our industry, you're seeing it in some adjacent industries and no one is immune to the pressures of inflation or the pressures of economic weakness should they get more intense than they are today. But our core consumer is probably, if you think about an 18 to 30 5-year-old, we certainly resonate very strongly with Gen Z with millennials, but we do appeal across all generations, whether that's Gen X, myself as a Gen Xer or baby boomers. And again, this goes to why I think we've been able to prove our portability and be so relevant in so many different types of markets, regions, trade areas. We've noted recently on our earnings call that our lowest region, we don't have a region that our averaging volume is below 2.6 million. So we have very consistent strength across the country. And again, I think it's a testament to the broad appeal. Our gender mix is pretty balanced as well as our generational mix, but do skew more to our core younger consumer or an 18 to 30 5-year-old age range.

Now, one of the things that's interesting to me in terms of your growth, Brett, is penetrating that demographic more. You've been driving traffic to existing locations, you are also opening up new locations, you've just crossed a billion dollars in trailing revenue. That's a big milestone for you and you seem to have done it without dropping price or using price as a tool to get more folks in through your doors. Talk to us about your pricing strategy.

Yeah, so as I mentioned earlier, we've really want to work on behalf of our guests. We talk about investing in our team members and investing in our guests, and that manifests itself this year in only taking 1.7% menu pricing and that's going to likely underprice inflation. That's expected to be 3% plus. And in recent years we've been able to underprice that 800 basis points. So we're always trying to work on behalf of our guests to bring them higher quality ingredients, not have to pass along any costs and be able to be more efficient operators to absorb any pricing pressures we're seeing on the input side on COGS or labor.

Give us some specifics on how you are managing to do it because so many people can't. And I think it's underappreciated just how difficult it is to execute against finding productivity gain. I've been a ccf, it's really difficult, so easy to say, hard to actually go do. So what is it? Is it as you grow bigger, you're getting the benefit of scale and purchasing ingredients? Are you somehow finding productivity within your restaurant walls? And if so, how? Give us a couple of examples, a couple of anecdotes that really drives home how on earth you're doing something that is so hard to actually do.

Yeah, it's a great question. This is what we've done since our very early days as a private company and what we've tried to be steadfast as a public company. And you'll hear us talk about being focused on the longterm, being focused on not the next 10 weeks or the next 10 months, but the next 10 years and beyond. And so some examples of that are vertical integration, our production facilities. So we've invested significantly over the years in vertical integration where we produce our chef crafted dips and spreads. We make our TKI with fresh dill, fresh cucumber and garlic just like Chef Dimitri, one of my co-founders used to make in the original full service restaurant. But now we're doing it in 10,000 pound batches and we're doing it with a pasteurization process called high pressure processing so it doesn't use heat, so it doesn't kill the flavor nutritional value.

(12:52)
And so we're able to deliver that quality with consistency and cost effectiveness at scale and take that complexity out of the four walls of our restaurants, making our restaurants easier to run and more efficient for our team members or our digital investments. Over the years we've invested significantly. We built our own digital order ecosystem and now we've got over 300 million in revenue. 38% of our mix comes through our digital channels and we built our own digital app, our unified commerce site on our website, and that allows us to deliver a certain experience to our guests, have throttling capabilities on the backend so that our team members can manage the order flow of how many orders they accept every 15 minutes. So all of these things have gone in as long-term investments to make us more efficient, more effective operators. We source over 85% of our ingredients directly from our grower rancher and producer partners, and we manage the logistics into our distributor partners who then put those products together for last mile transportation. So again, it allows us greater control, greater efficiency where we can afford that quality but not have to pass along and higher prices to our guests.

And I'd love to get your quick take on restaurant automation, kitchen automation, whether it's in fast casual or other places. There's been a lot of buzz about robots in the kitchen. Has Carver got a strategy around that too?

Yeah, we like to say technology to enhance the human experience, not to replace it. Our mission is to bring heart health and humanity to food. So if we were all robots, we would lose that humanity piece and we think there's a lot of power of productivity improvements in technology and automation specifically. I've written about this in our shareholder letter the last two years where I think we're on the precipice of a decade of data transformation. We've kind of just exited a decade of digital transformation. I talked about some of the things we invested in our digital ordering infrastructure, digital, many boards, et cetera, but we're really investing on our data foundation. One of the things that we're trying to leverage over that foundation is an initiative we call Connected Kitchen. And so we have live in four restaurants right now where we have camera vision and sensors over the serving line using generative AI to detect how much food is being depleted from the serving pots and then cross-referencing it with historical sales data, real-time sales data, weather data and event data, and then projecting to our grow cook, here's how much chicken you should be cooking right now or to our team, here's how much pickled onions you should be prepping for the shift or prepping after the shift for the next shift.

(15:26)
And that's reducing out of stocks, reducing food waste, taking that complexity out of their minds share, bringing them up to deliver that great food and great service. As it relates to automation, we do see an opportunity on our second make line. So one of the investments we did starting back in 2015 when we started to see the rise of digital ordering was to put second dedicated serving lines in every restaurant so that digital order production wouldn't interrupt the in restaurant production. We see an opportunity to automate those lines because our digital customers, when they're ordering on the app, they want convenience, speed and accuracy. Our physical channel consumer, when they come in, our customer, they want to interact with our team member, they want to have that walk the line experience, the five senses, hearing and smelling the food, cooking, talking to our team member about what ingredients they want. And so we will always have a human element on the front facing part of our in restaurant line, but then utilizing automation and utilizing generative AI technologies to take a lot of the complexity in the back of house and behind them to free them up and make our restaurants easier to run and more productive and more accurate delivering on our commitments

And how much using data at the moment and predictive analytics, Brett, when it comes to managing your supply chain in a world where tariffs hangs over so many different people's ingredients, sourcing strategies,

Yes, that changes not only daily but hourly these days. That's true. So our team does a great job. We have a lot of contracts in place, so that helps mitigate some of the short term volatility, but this is the promise of ai. It's certainly you have to be mindful about where you place your bets and what you go after for second and third, but you can apply those productivity opportunities in every area of the business, whether it's supply chain, whether it's right now we have suggested ordering, which is a form of automated ordering, but it's not as sophisticated as what we can get to where you're simply scanning the physical inventory. The system is cross-referencing all of those data sets I talked about before and menu mix and getting very specific accurate ordering. So again, you're reducing waste, you're improving just in time freshness. So there's so many different applications, whether on the supply chain front, the labor front, the business intelligence front or the marketing front and how one of the things we did last fall was relaunch a re-imagined loyalty program really to increase our first party audience and be able to understand our guests and really have better channels of one-to-one communication and being able to understand and utilize that data to create much better guest experiences for them.

(18:11)
And even the types of scenarios where you have a order and you ordered for noon, and our new kitchen display screen system that we're rolling out, we have text notification, it's dynamic, we're running a little late, you get a text at 1140 that it's not going to be ready until 1205, you pick up the order, but you're not the type of person to complain, but we know that we delivered it to you five minutes late. We drop some points in your loyalty account and do a proactive recovery and that the data can be automated and tell us where those opportunities are and create much more powerful guest relationships.

Brett, you've got a lot of plans to expand the number of restaurants that Carver has, but in terms of diversifying revenue, what are some of the other avenues you're looking at for growth?

Yeah, well, interestingly enough, we are in almost a thousand grocery stores today. We are in Whole Foods markets nationally, and that business actually predated our fast casual business. That's how I came to meet my co-founders. And then we co-founded the fast casual after that, and we sell all of our dips and spreads in some of our dressings in those grocery stores. And it's a very small piece of our business today. We see it as a potential growth channel in the future, and it's a great brand halo and a validation of the quality of our food, and again, another awareness touchpoint and an opportunity for us to have our brand in that precious real estate of somebody's refrigerator at home and being served to their friends and family, not just the place that you go out and get lunch or dinner at. So that's certainly a growth channel opportunity in the future.

(19:48)
I think a more immediate growth opportunity for us is catering, and that's something that we are testing. We've been testing for the last year. We just launched what we call a market test in the Houston market and understand how we use our production capability and capacity to support the demand in the market because what we know is catering is a different production muscle and it takes a little bit different equipment than our regular digital and in restaurant channels. And so we know there's real catering demand for COV out there, but we don't want to come at the expense of those other channels. So we've developed a couple different formats. One's called a hybrid kitchen, one's called a digital kitchen that have centralized catering production to support adjacent restaurants. And then we look at regular restaurants and say, okay, if they have really high volumes, how much catering capacity can they truly accommodate?

(20:41)
And then how do we then load balance the demand in a market against all of that different capacity and the test we're going through this year and look to launch a full catering channel in the future because we've got great demand and interest in all the test restaurants, we've catered a lot of professional sports teams. We recently catered, we did a collaboration with Gabby Thomas, the Olympic Gold medalist, and then when she did, she had her Met Gala event. We catered her team before the event. We cater offices and schools. So we know it's got a great appeal in that channel and it's a tremendous growth opportunity, but we want to make sure we set operations up for success so we can deliver on that guest commitment.

And what about the third day part, Brett, you've referenced the lunch dinner split amongst your customer base. What about breakfast?

I wouldn't expect us to do breakfast anytime soon. I don't think our current real estate portfolio is really oriented to the limited service breakfast customer. I think you're either very completely drive-through oriented and we're building more drive-through pickup lanes and it's more handheld food in a car, or you're more of an all day cafe kind of dwell type concept with a big coffee program. So we do serve well. We are open for breakfast and we have a few airport locations, but I wouldn't expect breakfast to be a major day part for us anytime soon.

Let's wrap up together, Brett, with a couple of rapid fire questions. And the first one is, which company do you most admire? Carver is not allowed as an answer. You have to pick someone one other than your own.

Yeah, we really admire Costco as a beacon brand for us and the way they take care of their people. We've always strived to be a people first organization and a place where you can come and build a career, not just have employment. My partners and I, we all grew up working in restaurants. Many of my partners mothers worked in the restaurant industry and didn't have a lot to show forward. And we understand that this isn't necessarily a transitional job for a lot of folks. This is a livelihood and an opportunity that we want to make it a career for them. So I think Costco has always looked at their people in a way that they're investing in them.

You are opening very quickly across a lot of new locations in a lot of new cities. Brett, in which city has Carver opened a location that has been the most surprising?

Yeah, there's been a lot of surprising locations recently that has gotten us even more excited about the future white space opportunity. I'll just take one. Recently we opened in Lafayette, Louisiana, which is about an hour west of Baton Rouge. And if you asked me five years ago, were they ready for hummus and zeki in Lafayette, I would've said, I don't think so. But we've been welcomed with open arms and we're thrilled to be in that community. And so that's been a really, really nice surprise. We figured they were ready for us, but just to see the kind of warm welcome we've received has been amazing.

And last question for you, Brett. If you could eat only one carver dish, it's your only meal for the rest of your life, which one would it be?

Well, our harissa avocado, you noted, is a phenomenal bowl. It would definitely have harissa honey chicken in it. I'd also make sure it had crazy feta in it, so I'd make a custom bowl, but those would be two of the ingredients that would be must haves.

There we go. Co-founder and CEO of Car Brat. Schulman, thank you so much for joining. Come on back. There's a lot going on, so come back, keep us updated. I'm Anne Berry. Thanks for tuning into After earnings, the show that brings you up close and personal with the executives behind the world's most interesting publicly traded companies. If you learn something today, don't forget to like, subscribe, and share with your friends. Come back and we'll see you soon.