CAVA - Earnings call 3 2023 | CAVA Group, Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to the CAVA Q3 2023 Earnings Conference Call. [Operator Instructions]. This call is being recorded on Tuesday, November 7, 2023. I would now like to turn the conference over to Matt Milanovich. Please go ahead.

Matt Milanovich

to Quarter welcome Conference Financial and Call. afternoon, CAVA's XXXX Third Results Good

if progress. already further as the update do the we is as investor.com.com. The you Before begin, well conference this not the on website and the call on company's X-K purpose results of available give earnings related general have regarding furnished provide are with investors a SEC to our company's at details release copy, a financial

financial non-GAAP calculated measures on will contain everyone remind GAAP website. Once find release any You deck, of directly call unreasonable measure this of to that and call financial to without each company's most again, earnings which in discussed let statements. the in available reconciliations forward-looking will today's with today's is me efforts, supplemental the the posted comparable extent accordance on

more the and as Brett developments result otherwise. turn or the no could made that any undertakes historical made over forward-looking call For of CAVA publicly aware be today, fact as to statements I'll uncertainties filings revise to These materially filings today. statements. and statements as statements such differ those are company's be are of statements risks explained CEO, by from and Please statements. to deemed may the this during detailed results law, here new cause forward-looking of to factors And a SEC. discussion be of refer of detail and the for update or are Co-Founder forward-looking subject future actual in discussed any not information, risks should forward-looking statements to to and statements. All uncertainties this with are in purpose, obligation required except CAVA's a forward-looking these Investors risk various Schulman. any now whether that that call

Brett Schulman

to welcome everyone. Matt, Thanks, the and call,

and of opening again we results broad our In XXXX face line successfully in headwinds, of top our new innovative strength Mediterranean strong continued unit impressive country. concept. demonstrates clearly appeal across and business, the restaurants once the of Our delivered proven quarter CAVA's the the consumer growth while economics the portability of third

a we're and this our environment, cultural the and cuisine next growth in is strategy long-term remain approach CAVA we confident taking targets. While defining white opportunity. substantial category in measured creating major space with

quarter CAVA share delivered we've We efficient, economic building and extraordinary scalable of powerful a a economic XX.X% we putting increase a restaurants, on regardless third X.X% the revenue, our in quarter engine, same-restaurant invested million, ending a the EBITDA quarter increase XXX us of gain XXXX, XX.X% have an sales of in XX.X% net a and XXXX unit potential and million. operation, of strong $X.X XX of growth, increase income increase restaurants, new position year-over-year. Adjusted in third $XX.X with CAVA including $XX million deliver the traffic, in conditions. In to over net a

the strategic Our results grounded capitalize strong to X are and our in on opportunities pillars. QX ahead ability

with CAVA now continued and energized in putting XXXX. First, additional we're the milestone us We Mediterranean Arizona, the track last conversion fourth operating XX across brand. during seeing XX new restaurant are and net for important new our XX Georgia, team CAVA quarter quarter restaurant a is completed, This under we've expansion to far, net restaurants in openings we brand. [indiscernible] we restaurants XX that With powerful are on results. Carolinas our CAVA category-defining single the Alabama, the solidifying so Florida, California, opened opened our Texas. In

the We're that of annual are excited with X openings sector, restaurant real least As in we others in seeing at XX%. craveable and unit Chicago we at share enter continue least count across in expect our estate changes expected growth to hospitality XXXX new country, we market. food the Mediterranean in market. to Like

landlords. diverse However, number is we've on and a or markets of pipeline small built dependent not the

has In inspections. in ensure availability, addition, from team our are estate pipeline potential over increased past we and the equipment been real insulated permitting building buffer delays our year to into

second strategic best-in-class is Our modern, pillar organization. developing a

As run we with leading to support and an XXXX, We're perspective, every is brands competitively new tools positioned exceptional to we're XX% guest team and operations restaurants the country. To building continue among by from the pipeline creating of GMs and equip being track internally restaurant ensuring a compensation strong, highly skills and them we're we In with scale, in that to and and every markets to we training great provide sustainable growth, to shift, fantastic to invest remain target deliver great results consistent choice employer day. place members and culture run of goal. the leaders across a experiences. on qualified, engaged achieve our the of committed our

future for year, in the Connect, we of Our have the existing conference and the to celebration. brings this including Academy a network that restaurant end a of across GMs recently the and plan XX training CAVA end the Academy enabling held of all together we had XX recognition leaders. localized leader education GM X promoted September, as serves markets for by our country. In to system QX, multi-unit supports GMs, We At farm position. pipeline

the safety Over X and robust foundational metrics standards experience. development, exhibiting people rooted team our celebrating was initiative members X conference member for sessions recognizing competencies, the training initiatives on leaders GPS. focuses This education standards execution. values call standards addition days, and and we to in what management, the our and on team our In in team participated operational mission guest for on and P&L food guests,

our will successfully are complexity an XXX for experience third locations, efficiency dips investments taking Among grow CAVA's is love an excellence, to this guests. scale We've and restaurants the costs which investments we leverage business. strategic delicious investments, These we're is to strategic own in recipes. create these our made over building and when vertically and emphasis Fed as know improving and on creating the infrastructure pillar producing restaurant Our time the than thoughtful to more support integrity with By unique out as deliver. and growth exceptional operational spreads, concept our with it. our first the it and crazy overall maintaining today, [ of Across [indiscernible] ] full-service CAVA of model. is fell guests was quality of production integrated our our

is these Maryland set delivered XXX QX management restaurants Our hired builds Virginia, as current foot support as to least a The team in will loyalty, along Verona, new place. square capabilities further our operations the facility customer been XX,XXX in has at commence able pace to with passionate which is and in our is base. be Verona, XXXX. business. Shifting complete, envelope well being diverse, has out equipment to and in CPG facility Laurel, on CAVA

members inform expected new in all December, in will in rewards more at loyalty late next We program with mix to will couple creating are in the and the of deeper our new a stages we loyalty guests aimed engagement developing and will relevant and rollout The points a early model connections pilot a program In tactics market. bankable the traffic, nationwide transition further we loyalty of of driving experiences weeks, frequent, launching Houston XXXX. the new check. and pilot

offerings to back fan Balsamic We efficient ball X recently validates Our team and the robust successful ensures best-in-class Date favorites, brought stage continues inside gate limited-time only a culinary innovate launches. new Chicken of Pita process our portfolio a steak. an to requested and existing we'll exciting be needs. our offering sweetened Spicy item highly new brings market item, is soon and complementary Chicken main a that testing Steak and

a and Coriander makes reengage Our been guests, opportunity to has performed our begin ones stage flavors who each expect Sun-dried if Mediterranean we pepper those the which at Dallas a CAVA and from showcasing results market Steak of giving launch visited take later inspired is GMC, in Tomato haven't ] the operational month. [ and next Boston, to us by an have and attract steak tests including date nationwide while. lot special delight is in existing to new test positive the to scheduled stage in XXXX. what and next And continue, successful. The well is gate

QX of I call to the like up opportunity Tricia, Before and in turn with highlights wrap to the front us. over I'd reiterate

to our driven by same-restaurant traffic growth X.X% growth. XX.X%, CAVA's results brand. was This continue sales of quarter's strength the show

to margin during with profit powerful restaurant a economics million nearly QX, million of build $X.X continue Our [ XX.X% million resulting level CAVA unit of net in $XX and AUV and $X ] income. EBITDA adjusted

crave, bringing now more to fluid unique Finally, I our Mediterranean a connections replace combined At welcome, to of and walk feel my warm healthy express that has they and that restaurants were cuisine their let for are CAVA living hospitality, our health members cared life through I'll the them that, way. online to to heart challenging everyone commitment our humanity like you and food. for humans say exceptional at is restaurants that consumers than night financials. make in Tricia looking that's embodies welcome to ever. failed emotional world and table. our With want and is We're generosity for, tasting CAVA, with real-life team gratitude

Tricia Tolivar

CAVA been year-over-year Thanks, from locations. for included We Brett, count million. sales to bringing NROs conversions increased suburban XXX CAVA and broad-based clarifying sales third a and would sales grew restaurant the and to opened X.X%. a of our restaurant that not Same-restaurant to the total same-restaurant XX.X% same restaurant this by [indiscernible] sales. We take CAVA in restaurant sales regions opened net calculation. our a minute when vintages, good across afternoon, new CAVA quarter XX as clarify converts driven have noted at quarter, to I days, they to $XXX.X the growth when strong XXX. everyone. of like same strengths traffic XXXX base CAVA least restaurants urban XX.X% revenue in is Both location growth both in same-restaurant entered

for new in We confidence XX to XX new unit are XX a range to raise us opened strong start QX with to guidance to the our year. already off giving restaurants

standpoint. restaurant from model level New top outperforming openings restaurant and the margin line are the

$X.X revenue million occupancy. prove on representing improved or of XX.X% food, and in above largely level was costs expansion a with the sales third geographies profit and $XX.X an The overall addition, result of quarter was versus leverage margin we million prior in continue year, CAVA In XX.X% our of and million restaurant portability revenue labor $X.X a all the packaging beverage or $XX.X and AUV to XX.X% over million. increase.

profitability the our business Our third quarter of model. power demonstrates

our restaurants, of XX beverage by profit we lower to do of expect Given new basis incidence our labor commitment input our menu food, investments lower near from to current of quarter in quarter and hourly XXXX costs by increased CAVA's and XX.X% and by costs packaging level XXX and driven product was leverage not XX.X% an the costs were the driven premium increase down maintain third higher points this decrease mix. CAVA increased restaurants. continued This points, than third in revenue, term. of by mix of offset driving in of favorable stage growth and and XXXX. an average related basis partially were margin of from wages sales, items

each on place a where can our wage investments QX our a beginning continue QX's to competitive As job. At XXXX. other of with We average we in are to discussed above wage our call, team X% we CAVA in career approximately benefits. to team reinvest ensure increases just market, not members and we made QX, have of the highly and incremental second a driving believe members that build quarter wage intend is

to XXXX. XXX We QX on basis a expect this restaurant to our beginning points have of in margins XXX level impact

in expanded growth, we future members. are to improvement addition, occupancy These of hourly the and we to of investments revenue, CAVA part-time to of points of sales all operating and XX of from expenses team basis revenue, our overall other investments related points health due XXXX XXXX. performance. of due the sales. decrease of from were benefits expect to third higher expenses XX increased critical basis X.X% to were In leverage. CAVA further XX.X% XXXX third care support types Shifting quarter quarter an a

cost $XX.X was increase for is million Our by of $X.X costs, quarter, compensation, growth. performance-based million recurring administrative primarily and to an in expense and $XX.X in XXXX. accruals higher This support excluding compared to driven general public million company increase the stock-based QX

million the of basis net restaurant leverage an As of well due debt profitability the costs, in and we margin million XXXX. Shifting G&A share undrawn partially included expect flow recurring needed. to for performance-based company a At expenses from to excluding We count in the quarter, net The $X.X compensation, had related XX.X% public to would opened million access quarter reported points model was of of stock-based QX current revenue, operations prior our value with in quarter be a the continue of the of share of option XXX by new end million capable was improved prior from accruals we the $XXX.X quarter, not and offset driven higher year in and CAVA's and liquidity. the Having million loss earnings our increase per costs percentage growth wage driven sales. Adjusted $XXX compared compared EBITDA are the liquidity increased given QX. for the was primarily million. with XXXX. million, our in of year-to-date as of $XXX operations restaurants the results investments increase hand to in of for $X.X power million QX. We burden on an units of preopening we the quarter in including by margins $XX.X restaurant level of of our the a $XX cash considered increase current X to XXXX, than XX income the and QX million representing between term. higher $X.XX QX cabo period a adjusted year in was was of as which in in $XX.X guidance, QX in we've delivered million delivered restaurant the in our an of long CAVA XXXX. $XX.X EBITDA, revolver $XX.X period. level I to preopening The increase sales outstanding, QX demonstrate over by improved that $X.XX continued the and XX.X% per with performance fleet. QX to adjusted more profit diluted all compared to We related normal, and if said delivering reflected QX is costs new costs to EBITDA of driving should diluted the QX, cash for Keep everyone date the the the to be remind loss opened openings. in of increase like with share across reported that mind, from

of week, costs XXrd for the year we following: $XX full XX%, million the openings, which level XX% net and adjusted least $XX.X million; XX outlook our of same growth, the to excluding Turning EBITDA, impact CAVA including restaurant $XX XXrd expect of at costs and sales new XX preopening XXXX, restaurant between includes a the and cover million. week CAVA to margins profit XX% burden between between and $XX.X preopening and million restaurant

Before provide turning for want to some to XXXX. thoughts Q&A, high-level I

X% pricing, our X.X% regarding to expect starting of we in price to historical First, return to increases January.

share call, sales we and our initial restaurant level to guidance restaurant While provide earnings some margin next same on we want color. with will you

along with QX We are taking mild winter Omicron lab. a consideration of into unseasonably QX XXXX an benefit XXXX

of XXXX. lesser well QX extent, As and the halo benefited QX IPO a that to as

previously restaurant investments XXXX. and profit Additionally, reflecting in moderated margin, investments discussed, potential as more additional level we recent labor expect a

will Finally, least count move growth XXXX. as to rate XX%, XX XX at unit to an new we previously annual expected to in an of units projected, unit translating net of

Now back over the turn to Q&A. I up will call for operator open the to it

Operator

[Operator Instructions] Barish from Jefferies. from comes Andy First question

Andrew Barish

Yes, great results.

to I sales on It up bit to clarify, year-to-date. of to something year? can math you wanted how are the missing positive. a implies XX% the sort rolls XX% for right fourth slightly same-store Or on doing I'm to Just what the flattish of quarter clarify you've that reported the there? kind little Am

Tricia Tolivar

to hear you. Andy, Good it's from Tricia.

up the prior comp a that strong fourth the the play and the what And of the consumer. taking environment the So at And that guidance or on quarter positive, is extent, X.X% impact have to macroeconomic about XX%. a in reflects so. to may it is year little implied lesser the into

Andrew Barish

in first at in you we And And be lapping, appreciate year? turning comps the big can of Got as then thinking 'XX. really the early the calendar not-too-distant those half Are it. all still Okay. of numbers I look on the that future. Yes, positive, of even thoughts some some the

Tricia Tolivar

Yes.

So to X-year things at we tend on a stack. look

had so benefit in to a Omicron first and there a quarter when you XX% year, of going weather is of a and comp challenging was XXXX, the related about XX bit And last to points of that for us. make

seems on So I QX. positive wouldn't annually thinking a sales long-term basis into But sense to low approach significant expect make comps mid-single we restaurant as digits certainly, to go to us. our in about same

Operator

The from next JPMorgan. from question comes John Ivankoe

John Ivankoe

In CAVA. And into that's the asked purchase good been third customer specific tightening you context wondering than results on that actually the do least to very you you've words, have Obviously, have the I stores been you've But in was thought been perspective, that's if secondly, wonder times have a customers expectations. some the the have better I busy. very to digital of accurate, in experience, that all pickup in left quarter. been. around really money table maybe if think kind been opportunities exactly the some wanted some that broader other post you customer already results. this stores to clearly, from an haven't to I place serve had and perhaps properly been operational what that do throughput even And experience? you relative walked if at a feedback there's of if execution And

Brett Schulman

John, for Thanks it's Brett. the questions.

there be facets. to working to term continue it members and guest on optimize opportunities are foremost this We're and Certainly, fundamentals all operations setting and clear. success look great business our up believe in building First, of at experiences and long our and the we want deliver first team operations to for I always for to hospitality.

as [ order our do as we order As ] it rates specifically, relates Yes accuracy to well digital track digital score.

how a us are we've increased is of this and us and actually that of been So periods, last the weeks, XX X X-point out last scale we've customers and judging rating couple the over for almost over X.X. in

operation we've which guests say not to increasingly higher the over that the haul, score of to speed operate as engine our certainly in improved happy an well that standpoint. happy as the drive to large long certainly time that's So mindful and our over very aren't be with performance, but even we're overheating seen from opportunities but there we not continue

John Ivankoe

more mean, does has And I I introducing variety use ability protein products system. gate it's part the idea just perhaps as obviously, steak, mean talk of as of SKUs maintaining you the an occasions more new to But stage process. how of customer. mean, complexity execution come the introducing that off that and balance you additional consistent do to necessarily add X that always provide about the interesting to and

Brett Schulman

question, to not Great XX our I XX John. menu billion really Yes. combinations, too trying creep complexity and and be And with talk much ingredients disciplined the into we're over about about introducing system.

the almost our removed a So a up opened new balls year ago, beef That slot menu. category. from mains within back we meat

spot So a used steak exist taking now. right that actually to be would

been to but also menu. bringing over that slot the rotational going and potato a on filling favorite beef our was slot, be item which have be We that currently actually we're white highly would requested where meatball we'll rotate that sweet back spicy fan a beef that's former through, falafel steak our reintroducing back winter, exists

Operator

David from The next question Tarantino Baird. from comes

David Tarantino

Congrats results great on here.

So a question. I had

just you the XXXX the I on wouldn't should you've that right you we times mentioned performance a on you baseline wondering baseline. restaurant elaborate make we're couple maybe the be could about same been starting page. underlying as new sure a just if what to think be the margin think recently as You to was delivering expect point, of

Tricia Tolivar

Yes. Thanks, David.

growth about reflective we're that's sure investments the term. that making in XXX well we're should to of in long the be certainly of continued mentioned XXX we reinvestment And over So the make wages for positioned basis points. to our that business continued that something

over QX we've not about demonstrate them. additional Remember, model our and our back been for expensive a as starting continue done but focused can to those view that the to want restaurant to will we're and as what something $XX and to the think on deliver make we as XXXX, that how term us. sure already evaluate can assets, that investments the that we've in investing employees and always in make for our is long long what level and investments always employees what historically it's them term to we'll you so certainly, our are opportunity they the focused went the of margins, we QX So very on, commitment wage in important ensure over the firmly we We power Pava term. positioned and near well we're deliver continue. But

premium P&L. And we'll down in a to our was restaurant-level we strong David, Honey And invest Peter of Herisa chips overall, in that thing, given we're [ So the that XXX value or XXXX, continue will points things we're same-restaurant we'll as it in that lot margins chicken]. PPA. strong the increasingly not in, into that invest more. One of And benefit that and in, to be ] ready that all to attachments to there's certainly throughout [ will like a if other least XXXX, as result attachments at are the well more in general, was a and uncertain environment if popular is basis bit and well XXX have leverage 'XX a PPA continue there that bit as very bring drives sales I does. of will but that add our plans sure high

Operator

from The Brian comes from Harbour next Stanley. Morgan question

Brian Harbour

about line. Tricia, kind I had labor question, too, a just of that

i.e., just next as taking a an broadly, you And account know I be there wages XXX here? bit of point? year at California sales played I percent to also, that's, XXX? are of more will seeing? labor in up expect, is does being a than I your some also think, And So maybe peers catch-up for this that, up increase that of that is of think net the impact that you'd little costs think

Tricia Tolivar

for thanks Brian, that.

so in we our run catch-up. members. demonstrates to Cava go historically don't And what them said view we an I how really earlier, team as and viewed we this investment and back going is our It into we a the how commitment And to really as future.

and wages, things. -- so And other it's benefits it's other that's

have minimum it's California, could There relates to do things as wages necessarily any we'll point XXX. about California, in be well. it reflecting price factored $XX 'XX making XXX should XXXX overall be other a a So impact XX they as as basis we that think in we're and on increase well. do not to as that in restaurant we're April, in you changes level when to margins. about in And yet. The

Brian Harbour

that's just And new unit this year. strong quite come openings, Okay. on obviously in

So what's Brett that you some I kind maybe think But run just the some challenges? ahead mentioned. of building enabling that alludes of that have target pipeline where still of to to seen peers

Tricia Tolivar

Yes.

time anticipating ahead the estate well lie built-in as really job as in and our good done into might teams real pipeline. our that design challenges have and a and construction lines buffers Our into

we our XX% a XX% So doing buffer so. from successful we robust and could we've creating raised that year, the pipeline earlier in in to been leverage,

to we had than And see so open this more restaurants planned. the year we originally opportunity

Operator

O'Cull Stifel. comes next The question from from Chris

Christopher O'Cull

into on that been maybe help consumer's continuing have premium quarter few a had the a a great trade you point little you to see dig on Congrats items more comp up for alluded factor has willingness and and this that to guys you next over has quarter. the a quarters more think you contribution that, to us now. Tricia, The quarters? to that the bit whether benefit understand to several just you can

Tricia Tolivar

Yes.

question, appreciate follow-up Chris. I the So

attachments, that we've seen look are items drinks significant we the at ships our So incidents premium as a in year-over-year. increase and

So up are particular, of couple a chips, in points.

points As [indiscernible] third few year mentioned, at And you this also year. and quarter as Honeyed Chicken, quarter well. as then is the up I third look last a

traffic to As sales. strength it relates goes same-restaurant a the on experienced. comps, the has sales in our impact overall back Really, that modest we to it same-restaurant

is nearly saw suburban And We demonstrates we So big food urban. all and just all how in cultural X% in traffic. next vintages, hospitality that across the create as across in growth country culinary our cuisine geographies across and and really category. resonating the

Christopher O'Cull

how Okay. has you've has expectations, then, schedule led the helpful. last which of of quarters. stores Brett, to just in you it terms this seen amount the for difficult been But the it ahead get couple potential of you that could I an -- issue the of do scheduling. time? addressing make that And leverage, about you and -- of the right the for number understand the made think how ahead that sure comp daypart I'm labor guess be right running do of hours growth which trying margin sure That's in I'm considered has hours, are have to right in right to

Brett Schulman

And Chris. the complement more found just with done of Yes. the hours. that of align allocating hours those what they traffic work to they lot and is some this, have effectively The efficiently of a right team bit on It's patterns. has a

right team front-footed be is before of the sure we right of our the are members want the make daypart a bands the mixes the tests we're to opportunities number complement revenue markets of across best and And at setting to into up to staffing revenue can fleet open time be to what going our that additional balancing different day of on the got So additional going road. But labor day down we've on various for success. at fire that in driving prep the throughput team various potential that the load houses and we for up ensure then different deployment lean times right we them. focused right on

our place forward. I as think we it's critical positioned in to make sure revenue best got operators the drive we've going

Operator

from next question comes Citi. from Jon The Tower

Jon Tower

then couple and clarifications a question. Just of a

guidance, on that implied magnitude quarter-to-date? of the the Are First, comp. the slowdown a seeing quarter about fourth comments you

Tricia Tolivar

of said XXXX as Well, what are quarter to reinforce We we at I'll we it to had same-restaurant XX% as a stated a going not our comp. And we've prior, give QX very earlier. in sales. just inter-quarter strong relates guidance or

as factoring so that we environment, in the macroeconomic with guidance outlined. well comfortable And that the uncertainty feel as the we've in

Jon Tower

it. Got

just an on going permanent it Okay. And that slotted is LTO? menu then item be or the itself, to is stake a

Brett Schulman

looking in still process more final are and at determination, a We it on we'll future stage through the to gate that have earnings. make

Jon Tower

environment environment, just question Okay. uncertainty. on pretty how just spend, an piece. they a where a messaging lot in on It's industry. of CAVA the low set seeing quite about breaks to discerning the environment, across we're one where -- step up noise to bit the macro idea through your the And to relative more brand are last competitive trying there's consumers you're the to little already the then value bit And awareness speaking being that I'm starting a and think the is

So kind what kind industry in next around draw the new year of to place as team the customers of steps noise up? value in does really have tools the across

Brett Schulman

John, Yes, the Brett. it's Thanks for question.

from got to great right? putting great think We're yet to low called the seeing We've seeing I fairly people compared it, you of resiliency brand larger brand. gravitate our up awareness We're consumer. our we're results. peers, some

the with the brand driving team and as CAVA awareness media as national millions can in feel for days effect our becomes and you It's efficient network becomes our Mediterranean in marketing well as upside you found and opening job. we amazing markets. get and have awareness phenomenal markets, spend the of like earned restaurants views standpoint. When a the a more get to these in our a virality national we from have community about cuisine incredibly So brand brand days. of social have, And like there's awareness us the a get more awareness increases on a coming think years and a a lot TikTok markets months our does we around really channel be brand these we in new tools

to So of at ago, the from awareness you X a look XX% already markets or brand the we've year XX%. some opened increased has

differentiated unit, has headwinds modern comes of the recreate getting CAVA a these at cuisine grocery of the our the in is stages home the appear taste a So resilient of nature this. And I that or again, of at our flavorful we're and to helpful and about face infancy satisfying think value of the macroeconomic or traffic for You then were similar why meal we're going store in it price, to a the of to at fit is a meal price. our trying some our type cuisine, early to and think our which and in the for of been cuisine health is similar perception, consumer right? in uniqueness when you similar a

of life resilient the the translated those this our quarter the next been we've continue inflation to we're of market share macroeconomic kind parts to grow year of the think results what's that when lack So only many their they're value we working other and proposition, be feeling face of what concerns. from talked we but proposition guests and or the for to value that's into pressures about in not leaning leaning taken our drive trying into peers thereof behalf increases price on of a to them Tricia compared have to great

Jon Tower

then about or me. And next there know we think wage starting into wage P&L about one in I the last 'XX? fourth over year. idea in investment rate investments the should -- just any of Are you this potentially other for getting quarter investments the carrying spoke

Tricia Tolivar

labor continuing to on We're for other evaluate Yes. investments opportunities the line.

restaurant testing the next is as other we're the in investments of something significant significant that standpoint, into give line labor different then of any that anticipating investments concepts evolve a get the ideas those items. different not that another But excuse we'll from and So for rest 'XX. more color P&L solidified, me, on -- call. on the on area could more that And we're

Operator

from question Blair. Curtis Matt William from comes The next

Unknown Analyst

as what to in your XXXX. for wanted as quarter fourth outlook is know the thoughts just just in inflation what well commodity look might preliminary commodity maybe inflation I a like on

Tricia Tolivar

Yes.

thanks, So Matt.

we chicken. go XXXX, significantly fourth in So into some as than benefited it experienced That XXXX relates commodity as nothing we've into we're already low input QX. mid-single-digit anticipating from will favorable inflation. particularly pricing, continue But to different has potential to quarter, what

Unknown Analyst

wondering in a of bit about been ramping tell if us sales both I Okay. XXXX point. how you to just profitability little terms and this the openings separately, And of Great. then was more could has class

Tricia Tolivar

as class. have margin our opened the level as pleased sales above And both with well they on our the expectations, side We're very restaurant XXXX perspective.

be to outperformed deliver like what So thoughtful in want future concerning we're as vintages is is you they've think much in able in thoughtful themselves about what think other into with on them think been how we being about seeing, from this but to really we I and classes just years. this XXXX that the year. and cohort to standpoint. significantly to do an has prior Nothing pleased productivity XX% that. Where class classes and new us go the wanting

Operator

test. you'd incorporating could results believe if you from is The to is the Piper in question format. lay influence comes catering impressive from into on you're this Brian. about opportunity. builds? Aisling you'd or today. store design My for a or is I something was I talk Aisling expect next new is out something it's testing restaurant if this Congrats question the traditional seeing on all on what stores, the And imagine Grueninger where the wondering successful, you're of in it the Sandler. This

Brett Schulman

Yes. the This Thanks Brad. for is question.

continue to to our now up we are CAVA we catering progress call kitchens. We test, and hybrid our on what

an with of new we've are units for these expanded So production. catering back house centralized built

we are few we're test there want is come support and don't catering other testing format the capacity In a the that catering to really are detriment addition and units restaurant, expand AUVs so significant to a channels. limited that your aren't the all so of point, because traditional as we production to at the that units we in growing because that know that we CAVA other

to country. other locations looking formats other able around supplement we're at the offered be or production those catering to have locations to across So

we're or we different orient launch next we a how the tests to over across So these understand the what opportunity so successfully nationally catering Board. great performing year format support to to think is production this

We We catered during Just the League spring. World Series their Texas almost Rangers every playoffs single in run. they Major were for this catered an Baseball summer. we team the example, catered the last when Lakers

catering but to how we're deliver great not build nationally. want or this being see we the about channel. workers great production it We our cuisine -- colleges, a only out our launch just we professional. see thoughtful be for when to So a capabilities schools, ready guest athletes, fit to experience We office

Operator

Capital. next comes Stump The Loop question Alton from from

Unknown Analyst

Just months, last wanted to I go after back just over high the settling But things kind XX to inflation, input XX-year be seeing is cost need or costs front. as of think down. the you particular versus do positive this a year, think heading negative versus your into store year? bucket that next input next to pricing a margin about level Obviously, year

Tricia Tolivar

Yes.

mentioned to on have we low in the in the mid-single the So we commodity also are we And the X% on investments side also the cost in then input some the anticipate January X.X% range, and on to pricing we discussed, exploring. digits. then as is call side and made that we've that labor raising got

margin good if think give overall take into you to the I perspective. of restaurant that consideration So view level are be going from all what you a impacts into a

Unknown Analyst

most. follow-up it next your But an then -- a I space, are you and very just next kind hop just for the what the anyone quick year. moving guess I helpful. pricing competitive one on are about on almost in of front, the right And positive guys you've plans in earlier the year, your environment feel now think queue. Got do actually pricing how I tracking into touched got You it, how just mean, you -- be? back trends versus will more much competition probably traffic But more room than

Tricia Tolivar

Yes.

competition. So mindful pricing sit we we're very of the versus where and

be. to While We Brett as CAVA home. experience guests want make touched create accessible on to sure how the many really to as we're can difficult it's at that we possibly

very we're that accessibility, competitors well about our the well against positioned to about perform very that we're So and business overall. thoughtful create also as think pricing, we but feel for

Operator

As I and are to call for further CEO Co-Founder, no will turn there back over Schulman, questions, closing the Brett comments.

Brett Schulman

again Thanks, teams evidence exceptional third broad of the call appeal the joining today. for concept. which quarter, to provides our everyone, an I further thank Mediterranean once want of our delivering for

powerful define by category, fueled a need space white significant engine, investments are keeping a front and successful us position. We're the a people clear strategic extending scale, to leadership next we infrastructure the and in opportunity and have cuisine we we economic cultural openings close in large-scale of country new unit We And our more future that the look I joining across restaurant create us. durable and what holiday next macroeconomic about the the to a season. wish a long meantime, on our can is excited we you in Thanks over focus conditions, deliver eye again for the but with brand value be speaking quarter. on couldn't happy holds. term, building forward you we as

Operator

your and that this conference gentlemen, and today. concludes participating, thank We you you Ladies your to for for we please ask call disconnect lines.

CAVA (CAVA) 7 Nov 232023 Q3 Earnings call transcript