Cava’s announcement last week of a $300 million deal to purchase the publicly traded Zoës Kitchen signaled a major realignment in the fast-casual universe: The merger, if approved by shareholders and regulators, would create the largest Mediterranean-style restaurant chain in the country, with 327 locations in 24 states.
It appears that Cava, the Washington-based company that started with a single restaurant in Rockville in 2006, is set to become a national player in the fast-moving, fast-casual industry. As a private company, Cava does not release sales figures. But one source with knowledge of both companies, who spoke on the condition of anonymity because he was not authorized to disclose financial information, said the combined Cava/Zoës would generate enough sales to immediately rank higher than at least two companies on the top 10 list of fast-casual restaurants in the country, based on 2017 sales figures from market research provider Euromonitor International. Shake Shack and Corner Bakery Cafe are No. 9 and No. 10 on the list, respectively, with $419 million and $376 million in sales last year.
Brett Schulman, chief executive of Cava, talked to The Washington Post about the purchase of Texas-based Zoës and the future of the chain founded by Ike Grigoropoulos, Ted Xenohristos and chef Dimitri Moshovitis. There are many questions about how the two business would combine resources — would Zoës add assembly-line customization to its menu? Would Cava feature more prepared dishes? Whose hummus recipe would win out? — but Schulman wanted to make one thing clear: When the merger is finalized, perhaps later this year, Cava will remain headquartered in the District, and Zoës’s office in Plano, Tex., will become a regional hub.
Here are edited excerpts of our interview.
What motivated Cava to make this acquisition?
The opportunity came across our way recently. It was just really compelling in the fact that our mission has always been to bring healthy food rooted in the heritage of Ted, Ike and Dimitri. This was a great opportunity for us to really amplify that mission.
Will the two chains merge or remain independent concepts?
We’ve always viewed ourselves as a culinary brand. We were born out of a full-service restaurant, then we started to produce and sell our dips and spreads in Whole Foods. Then we put it in an assembly-line, customized format. This gives us a way to express our brand in a cafe format. Now we have two different unique, dining options.
Does that mean that you will introduce Cava’s food to Zoës?
We’re excited to get to closing and work with leadership of both teams to understand how to best support the combined business going forward.
So you’re not sure yet?
[Laughs.] Zoës has a great real estate footprint in the South and Southeast, which is complementary to our footprint weighted toward the coasts. They have a loyal following, so we want to understand how we can best serve their needs, whether that’s through our assembly line at Cava or through the cafe format. We’re excited to think about how we can use all our capabilities, whether it’s our production capability with our dips and spreads or our technology with our engineering team, and apply them to the Zoës system.
How will Cava fit into, say, the Southeast, where Zoës already has a presence?
I’m actually in Charlotte, N.C., right now, where we opened two restaurants so far. We’ve seen a great reception to our cuisine in Charlotte in our service style. We’re excited that this can translate to all parts of the country and then excited to bring Zoës Kitchen cafe format to complement in other neighborhoods. Or maybe even coexist in neighborhoods together. We want to make sure that they’re unique dining experiences.
Are you planning to change the name of Zoës?
It’s business as usual for now. After we go through regulatory approval and meet the customary closing requirements, we will work with both teams for the best way to grow both businesses.
If you introduce some of Cava’s items to the 261 stores in the Zoës chain, how will you ramp up production?
The capital we’ve raised over the past few years has allowed us to invest ahead of our growth, whether that’s investments in our people and our team or investments in our production facilities and capabilities.
You financed the Zoës deal in part through an investment by Ron Shaich, founder and former CEO of Panera Bread. Did Ron buy a part of the company, or is he just an investor?
I met Ron when we had our second restaurant. He’s just been a great supporter of our brand for a number of years, and it’s great to have him come on in a more meaningful way. He purchased a stake in the business, just like our other investors have. [Note: Shaich will serve as chairman of the combined company.]
How much stake do the original owners still have in the company?
They’re still owners. Ted, Ike and Dimitri aren’t going anywhere. In fact, if anything, they’re probably going to be as involved as ever. Dimitri continues to do the culinary work across all of our properties.
How much do they still own of the original company?
That’s private information that I cannot divulge.