Cava Sales Jump as Americans Flock to Pita Chips, Salmon
Speakers
Michael Halen
— Senior Restaurant Analyst, Bloomberg Intelligence
Summary
Bloomberg Intelligence's Michael Halen discusses Cava's strong sales and why the Mediterranean chain is outperforming, then turns to Wendy's CEO-driven turnaround prospects following Trian co-investor reports. He also analyzes Brinker's Chili's brand, citing a multiyear same-store sales surge and operational and marketing improvements.
- Cava same-store sales grew over 9% with traffic over 5% in the first half.
- Cava's menu innovation such as salmon and pomegranate glaze and healthy Mediterranean positioning drive its outperformance.
- Michael Halen sees a widening restaurant winner/loser gap as inflation makes consumers more discerning.
- He is more optimistic on Wendy's due to its new CEO Bob Wright's prior Potbelly turnaround and franchisee support.
- Brinker's Chili's cumulative same-store sales are up about 70% over five years.
- Chili's turnaround is attributed to core-brand focus, operational gains, and best-in-class marketing.
- Management execution and frontline worker buy-in are emphasized as key in the restaurant industry.
Ideas
Cava outperforms on healthy Mediterranean value
Cava is outperforming with same-store sales above 9% and traffic above 5% in the first half, driven by healthy Mediterranean positioning, strong value, menu innovation such as salmon and pomegranate glaze, and limited seafood competition, making it a winner in a diverging restaurant industry.
New CEO turnaround makes Wendy's attractive
Michael Halen is more optimistic on Wendy's because its new CEO Bob Wright knows the business deeply, previously engineered an impressive turnaround at Potbelly, has energized the franchisee base, and has a plan to turn Wendy's around; the Trian co-investor reports are taken with a grain of salt.
Chili's turnaround drives Brinker's strong sales
Brinker's Chili's has posted roughly 70% cumulative same-store sales growth over five years, driven by returning to its core brand, operational improvements, best-in-class marketing from the CEO and CMO, and ongoing ingredient and menu upgrades that bring customers back.
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Speakers: Michael Halen · Tickers: CAVA, WEN, EAT