How CAVA Scaled Fast Without Losing Its Soul | Ted Xenohristos’ Playbook

Two years ago, we did the IPO. We announced stock grants for general managers of restaurants. My mom worked at a restaurant for so long. She said she never got any stock in any company she worked at. So all those little things build up. As we continue to grow, we can do what we set out to do, which was change the restaurant industry. The byproduct is that our team members are part of this growth and they help us get there. I am not going to open up a thousand restaurants by 2032. That's our goal. But we need everybody working in our restaurants to help us get there.

Thanks for having me. I'm excited to share my story. It's been a long journey, so lots to cover. Let's see if we have enough time to get through it all.

Cava today has about 380 locations in about 28 states and the District of Columbia, where I live. We were founded and started in the DC metro area. Our first location was actually in Rockville, Maryland. It's basically build your own, Mediterranean inspired. Both my parents are immigrants from Greece and we used a lot of that inspiration from visiting there growing up eating that food to build out our menu. You choose your bowl or your pita and from there you put different things in, ranging from grains and greens to chicken, lamb, and falafel, with adventurous flavors inspired by the Mediterranean region. For us, Mediterranean means Greece, Turkey, Syria, Lebanon, Israel, the northern African coast. What do these things have in common? They have amazing bold flavors and spices, and we use those to build our flavors up with foods that people know, like grilled chicken or honey harissa chicken. You build that bowl or pita sandwich, and then at the end you put whatever toppings and sauces or dressings you want. Our restaurants range from about 2,000 to 3,000 square feet. You can dine in, order online, do curbside pickup, or drive-thru. The real exciting thing is that we're able to share the foods I grew up eating with so many different people. Right now only in 28 states, but hopefully we'll get to the rest of the country soon.

It's a great story. My mom is from Cyprus. She's an immigrant from there. My dad from Greece. I grew up eating this food. The first time I met Brett Schulman, my partner and the CEO of Cava, he said, 'Let's create this kind of faster casual version of it.' He said, 'Let's focus on the healthy part.' I said, 'I'm not like a healthy eater. I don't eat salads and healthy foods.' He pointed out that this Mediterranean concept and diet is naturally healthy. I didn't realize it growing up because it was just the food I ate every day. That first restaurant was a small location in Rockville, Maryland, about 1,500 square feet. It was an old Russian bakery. We went inside to take it over and we really wanted to share the food we grew up eating and the quality of that food. The recipes our moms made us. My mom used to always make dinner. We wanted to do it for an affordable price and something people could share. We built that first restaurant with our bare hands. Everything from Dollar Store, Target, HomeGoods. I was a waiter at an Italian restaurant. My two founders, Dmitri and Ike. Ike was also a waiter with me. Dmitri was a cook, a chef at a restaurant next door. We built out this little dark cavernous cave in the middle of what I call nowhere, about 45 minutes to an hour outside DC in a failing shopping center. We built it for about $10,000. We used our credit cards, maxed them out, did everything by hand. Eventually we got it open. The first few weeks were a struggle. Nobody was coming, but slowly they trickled in. We used our Mediterranean hospitality that we grew up knowing without a marketing budget, without signs outside, without a POS system. We gave people free things: free drinks, free food, free dessert, and they eventually told other people. Before you knew it, that little restaurant had a really long line. After about 6 months to a year, we said, 'Let's open another one.' Within that, we started selling our dips and spreads at grocery stores. We ran these restaurants throughout the day, and then at night we hand packaged these dips and spreads: tzatziki, hummus, all the dips and spreads we sell today in Whole Foods. We delivered them to the grocery store at like 5 in the morning. I remember my first delivery I took in the back of my Nissan Maxima. I got to the grocery store and she said, 'What is this?' She asked, 'Has this been refrigerated?' I said, 'We made it in the restaurant, I put it in the cooler, and I brought it over here.' They denied that first delivery. Our second delivery, we had to have a refrigerated truck. We started to learn the hard way how to run multiple businesses at the same time.

She's from Limassol now. She was originally from Famagusta, but during the invasion there, they had to leave. That's when they came to the United States. They've never been able to go back to their childhood home, but their family is all based out of Limassol today. Beautiful country.

That is the heart of what we call the Mediterranean, the Levant region. You can get to anywhere and see all the different countries that inspire Cava today. It's an amazing place.

It all comes down to people. We use the line 'heart, health, and community.' Bringing heart, health, and humanity to food. We strive to do that every single day. My mom was a waitress growing up. It was a tough life. She worked day and night, came home able to make dinner for us, raised four kids. She had nothing to show for it at the end. No health insurance, no retirement. She left the industry with a couple bad hips. One of the reasons we started this business was to take care of people and to change the culture. We love food and wanted to share it, but we really wanted to change how people are treated. It starts with how we treat our team members. That's the heart part of that statement. The health part is the food. The humanity is the community we take care of. All those things together help keep that culture alive. All the founders are still a part of this business. We still work hard to execute on that dream to have a greater culture in a restaurant. Tuition discounts, family planning support, health resources, mental health resources, creating a sense of community within the restaurants. We have a GM conference every year where we bring everyone together for four days. We did it in Dallas, Texas this year. Creating those moments of connection and bringing people together. It gets more difficult as you grow. At 380 restaurants, what will it look like at 500 or 600? That's part of my job and that of Brett Schulman, the CEO, to continue to make culture the cornerstone of what we do.

It costs much more to hire someone, train them, have them leave, and do it all over again. At our first restaurant, we paid people more than they normally were paid in the industry. We gave them profit sharing, which was huge. We were on the cover of local magazines as 'Restaurant of the Year,' and in national publications. But I was living with my parents and building this thing. I couldn't afford my own place. I had people who worked for me driving into the restaurants with nicer cars than I had. The idea was that we were building something different, and scale would allow us to eventually pay ourselves and take care of more people. When we had profit sharing, it was so huge in that first restaurant. People thought the bartenders or the waiters were owners because they took care of the restaurant and customers like that. In 2013, about two years after opening the fast casual versions of Cava, we went to $13 an hour for an hourly rate. Minimum wage in some jurisdictions was $7 or $7.25. We were almost double. Our growth really took off because we were hiring people who loved to be part of this brand and gave us their all. They felt ownership in this brand. Last year, two years ago, we did the IPO. We announced stock grants for general managers of restaurants. Can you imagine? I told my mom. She worked at a restaurant for so long. She said she never got any stock in any company she worked at. All those little things build up. It's not perfect, but as we continue to grow, the more we can do what we set out to do: change the restaurant industry. The byproduct is that our team members are part of this growth and they help us get there. I am not going to open up a thousand restaurants by 2032. That's our goal, but we need everybody working in our restaurants to help us get there.

My favorite thing is the 'love button.' We encourage all our team members to use it. If Emily comes in and I notice she looks like she's having a bad day, I can hit that love button and take care of her meal for that day. Or if someone comes in with two kids, looking like they're struggling a bit, hit that love button and take care of them. It starts with giving our team members the tools to share that generosity ingrained in our culture. My dad is from this little village in the mountains of the center of the Peloponnese. We take people there. They don't have anything. In 2013, they didn't even have a toilet. They newly got running water. It's a very poor area. I would take my friends there and they would cook a meal. The generosity of that meal must have been way outside the range of what they wanted to spend, but they wanted to make sure those people felt at home. That's where it comes from. How do we give our team members the tools to do that? I walked into a restaurant once, ordered on a screen, and picked up my food out of a box. I thought, 'I hope this is not the way the world is going.' Giving them the autonomy to say, 'Hey, you want to try this?' similar to an ice cream experience, having that connection and conversation. 'How's your day going?' and going down the line talking to different team members. Having that opportunity to buy that meal at the end is huge. We try to ingrain those little things naturally through taking care of our team members. If I take care of our team members, they take care of our guests. I saw in our Charlotte restaurants, a gentleman was waiting for other guests to come. Our team member came from behind the counter and said, 'Hey, would you like a cup to make yourself a drink while you're waiting?' Little things like that. Can I get you a refill? A mom struggling with her tray and three kids, 'Let me carry the tray for you to the table.' These aren't things I've asked anyone to do. You see it happening, that spirit of generosity ingrained in the culture. It stems from us taking care of them, the team, and then that goes down to the guest.

There wasn't a lot of science in the beginning. We'd say, 'Oh, there's a Starbucks over there. Must be a nice area.' A lot of it was local. I lived in this area. I know where I go. I know what I like to visit. The first restaurant was in Bethesda with our partners at Federal Realty. They built a beautiful center there. We thought, 'This is going to be a great area. Lots of walking traffic, lots of other big brands that share our ethos, like Starbucks and Whole Foods.' Today, that's completely different. It used to be me and Brett saying, 'This feels good.' Now there's an entire team. It's all data-driven. We overlay data, look at different trade areas, and say our customer is over here. We can open a restaurant there. We can predict sales almost to the penny because we track that and figure out the best locations. You still have to have some instinct. You go out to LA and can find the best spot in the world, but if there's no parking, nobody is coming to you. We have an amazing real estate team. People that know more about real estate than I will ever know. They lay out where the locations will be, and then we have a selection committee. We also consider logistics. If I said, 'Let's open up in Greece,' everyone always asks that. How are we going to run those restaurants from the United States? There are logistics with supply chain, finding labor, the real estate itself. All those factors go into choosing a location.

That's core to my job as chief concept officer. I want to make sure we have amazing food, a beautiful restaurant space, and the ultimate experience when you enter a Cava is consistent. I started with our ethos to serve Mediterranean food like I grew up eating. In my dad's village, you walk through and see oregano growing on the side of the mountain, chamomile. Whatever livestock you see, that's what you eat. It's all about freshness and quality. Italian and French cuisines are driven by technique: I must make this sauce this way, this cheese that way. In Greece, it's about the freshness of the food. How quickly I sourced it. It's about the tomato growing right there. How do I pluck that and eat it right away? That's the ethos here at Cava. How can we serve the freshest food? Avocado is not inherently Mediterranean, but we get it as fresh as possible. For chicken, anything we make, tzatziki with fresh yogurt and fresh dill, we tried to find partners to help us make our dips and spreads at scale. We couldn't find anyone to make them with fresh garlic and fresh dill. So we built our own facility in Laurel, Maryland. We built a new facility in Verona and are looking to build a third one. That allows us to continuously make our dips and spreads and some dressings with fresh quality ingredients. We own the production from beginning to end. We continue working with great partners like Stavos, who brings in our olive oil and olives from Greece, about an hour from where my dad is from. I get to visit every year and make sure that's running well. We know the source. There are huge issues with knowing where olives come from today. Kalamata is a famous region, but they bring them from cheaper parts of the world, package them in Greece, and call them Kalamata olives. We know where our olives come from. We have a trusted partner. We build a trusted supply chain. Wherever we can bring fresh food in, we bring it. If we can get Roma tomatoes from Maryland during growing season, we do. Otherwise, from California or Mexico. We bring the freshest possible product from different parts of the United States. Then we work with guys like Stavos or Damascus Bakery, which makes a beautiful sprouted pita bread. We never say, 'We can't make this anymore.' Figuring out how to make it with freshness at scale is the most important job I have here.

We're always trying to deepen the personal relationship we have with our guests, whether they're coming into our restaurants or engaging with our digital channels. Being able to earn points and use them simply, not like complicated airline points. You earn points and you get to use them. We had our rewards members receive free pita chips on National Pita Day, March 29th. We served our garlic ranch pita chip, the first flavor innovation. They got first dibs. That catapulted into people loving that second chip flavor. Now we're iterating and creating new chip flavors every year. Food innovation came out of loyalty innovation. We want to continue to build on that. We will leverage the data to deepen guest insights and have tailored communication. 'Hey, I haven't seen you in a while. We have this new pita chip. We know you love pita chips.' If we can enhance those rewards based on what you actually buy and use, that will be a game changer for us. We're continuing to build that out and are excited about everything happening there.

We used to read them all ourselves. My partner Brett probably read way too many Yelp reviews. You find yourself getting defensive as an owner. 'I know why that happened.' I think early on we got defensive. The first thing you want to do is type it right back. We've grown up. We have a wonderful team that works on social media responding and listening. Now we use it as a listening tool. Brands spend so much money trying to figure out what people want. Here you have something literally free at your disposal. People are telling us what they want, what they didn't like. We have an opportunity to take that all in, synthesize it, and say, 'This is what people are asking for.' Do they want steak? We took our meatballs off the menu. People let us know they were not happy. It took us a couple years, but we innovated something like steak and made those customers happy. You have to take both positivity and negativity together. The positive ones are great. 'We are amazing. We delivered an amazing meal.' The negative ones are the more useful ones. I wouldn't consider them negative. The honest ones. It allows us to continually connect with our customers and give them what they want.

If they say it's supposed to taste like that, it could mean that with 380 restaurants there are a select group of restaurants that might be making it differently. Maybe someone's adding too much salt or too much pepper. We're currently testing salmon and chicken shawarma. Getting that feedback is helpful. We go searching for those reviews to see what people like or don't like. They share pictures. We can see if something doesn't look right. All that is super helpful as we continue building out our pipeline and culinary innovation.

There's so many things. I'll answer that question and throw in another one. When we were making falafel, our grinder didn't come in, so we weren't able to traditionally grind it the same way. We actually left whole chickpeas in there. That's kind of a signature call out on our falafel today. We learned and were able to parlay it into a differentiated version. Early on we were trying to master every recipe and be exactly what Mediterranean was. We ended up doing hummus without oil, which is not traditional at all, and people love us for that today. Being able to try different things was amazing. Meanwhile, we tried serving yogurt at the end of our line. Imagine a Cava line today with a yogurt bar and toppings. I love Pinkberry. But we were throwing away fruit all the time. We figured out, let's do more with less. Today, if you take all the things on our line, it's 17.9 billion different ways to build a Cava bowl with all the toppings and dressings. But we don't have that many at each decision point. Limiting those choices makes it easier for the customer. If we add something, we have to take something away. That's a lesson learned when we took over Zoes. They had a pantry so big it wasn't allowing them to execute what they wanted. We applied that lesson at Cava. We limit what we make and serve, but do it right so everyone has a consistent experience.

We took it over. They had about 400 locations. We had to figure out which ones to keep. The big idea was that we had this coastal smile: We had the West Coast and the East Coast, and we brought it all together with the Zoe's locations in Texas and the center of the country. We called it the coastal smile strategy. We slowly converted those Zoe's restaurants into Cavas, and they were instantly successful. A lot of team members from Zoe's stayed on board to run those Cavas today. That led us into the IPO, which was a huge moment. Again, the team members helped us get here. The same team members will fuel us to hopefully a thousand restaurants by 2032.

The idea was that the infrastructure was there, the kitchen was there, the team was there. We had harmony in Mediterranean brands. It was about how quickly we could convert them. At the same time, we had to operate that brand. We minimized the complexity, revamped sourcing because it didn't meet Cava standards. All those things were happening at once. It was not easy. It was a huge challenge. We lost good people because of the workload. But in the end, everyone who remained learned a lot. We all grew. I have a lot of those people on my culinary team today. The real estate team figured out not only how to open restaurants, but also how to close some. We had about 80 Cavas back then and Zoe's had about 400. We learned how to run a 400-restaurant brand and an 80-restaurant brand at the same time. The experience we got from that is something you wouldn't learn in any school or company. It fueled the growth we have today.

The deepening of the connection happens with the team members and the guests. I've preached that since the first restaurant. I was a waiter before I opened my first restaurant. I didn't graduate from school. I went to Maryland for a couple years before they kicked me out. In every restaurant I worked, I built up my own clientele because I loved hospitality and taking care of people. A family would come in and they wanted 2% milk for their daughter, but we only used whole milk. I ran to the grocery store and bought the milk. When I brought it to the table, they didn't believe it had miraculously turned from whole to 2%. I told them I went to the grocery store. They were so thankful and came all the time. That little $2 milk turned into probably thousands of dollars they spent in our restaurant. When their daughter graduated, they had their graduation party catered through our restaurant. Those little moments deepen the connection. You have to take care of your team members. Every restaurant I worked at, some did it, some didn't. I learned you had to do that. If we continue taking care of our team members, they will take care of our guests. That's the only way you will deepen that connection. My manager in Bluffton, South Carolina, or Bethesda, Maryland, or Culver City, California. How am I going to talk to all those guests? It comes down to them and their teams. We have to take care of our team members to make sure they deepen that connection with our guests. There are other ways to communicate: through our loyalty program, reviews, social media. But the biggest one is human connection. That's something Brett and I preach all the time.

Go to cava.com. That's going to be the best way to find a location. I used to go to every opening. Now I don't get to as much. I love opening new cities. I'm excited about Pittsburgh and Miami.

Thank you for having me. I appreciate it.