Cava bucks restaurant industry trend with successful non-discounting strategy
Cava CEO Brett Schulman explains the restaurant’s no-discount strategy.
Cava differentiates itself from competitors with a unique strategy: No discounts.
The Mediterranean chain, which has launched hundreds of locations across the country since it was founded almost ten years ago, has stuck to this strategy, maintaining that it does not need discounts to generate short-term traffic.
Founder and CEO Brett Schulman told FOX Business that companies can fall into a “temporary trap” of throwing out discounts to drive transaction growth in the short term. Public companies, he said, are feeling pressure in the market, which can make it tempting to chase quarterly results by offering discounts just to hit a number.
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But Schulman said that Cava always makes it clear in its earnings calls that this is not a strategy that the company intends to follow.
He said those short-term discounts don’t build long-term customer relationships or “speak to the differentiated value of what we put out every day and offer to our guests.”
Cava bags outside the company’s restaurant in Brooklyn, New York. (Gabby Jones/Bloomberg via Getty Images)
“You can’t discount your way to prosperity,” Schulman said. “We want to invest in our guests for the long term and continue to provide strong daily value.”
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It’s a very different perspective than an industry that relies heavily on discounts and aggressive price promotions to drive traffic among budget-conscious shoppers.
After McDonald’s brought back its Value Added Meals in September, a number of competitors began upping their value game, rolling out their own versions of affordable bundles or promotions.
The interior of the renovated Cava restaurant. Cava is developing the interiors of its restaurants under a program called “Project Soul.” (Cava)
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The fast food industry has faced a combination of challenges, from pressure on margins due to supply chain problems and high labor costs and rising minimum wages to a low street industry. To combat that, many companies started offering deals to attract budget-conscious consumers and to sustain the dwindling crowd.
“The restaurant industry is responding to what is one of the lowest measures of consumer sentiment in the last 50 years, and in these times, consumers want to feel like they’re getting the best value for their money,” Mark Wasilefsky, head of restaurant and franchise finance at TD Bank, previously told FOX Business.
But Wasilefsky acknowledged that Chipotle and Cava were doing better than their competitors.
Over the past two years, sales at Cava stores have increased every quarter. Schulman also noted that its locations are opening with more than $3 million, a new record for the company.
Schulman said value is not a price point but is created by enhancing the entire dining experience. Cava’s strategy was focused on serving high-quality Mediterranean food, meeting the current health needs of the customer and providing the convenience of mobile ordering, drive-thru or delivery.
The company also focused on cultivating a comfortable dining experience. In-store ordering experience too. Schulman said this includes friendly service during the “walk the line” ordering process, generous portion sizes and accurate orders.
Outside the Cava restaurant in Detroit. (Cava)
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In the new year, the company plans to finish upgrading its facilities with beautiful chairs, lights and plants. It also plans to introduce new menu items, including grilled salmon, next year.
