Innovation is happening at a faster pace. How can your business keep up with accelerated trends? The first step is to meet your customers where they are.
How can you keep up with shifting customer expectations?
You have to meet your customers where they are.
Brett Schulman, CEO and Co-Founder of CAVA, has been able to adapt to accelerated trends by putting his customers and team first.
Check out Scott's Entrepreneur article to learn what he took away from this conversation - "How COVID Has Accelerated Customers Controlling Everything"
Have feedback? Connect with Scott Case on LinkedIn
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Scott Case 0:00
Hey, I'm Scott Case, I'm co founder and CEO of Upside. Welcome to a special edition of Founders Focus. This is a special episode that we're doing. And I'm absolutely thrilled to have a special guest, Brett Schulman who is the CEO at CAVA. And I was just telling Brett that I had CAVA yesterday, it's one of my favorite fast casual places to go eat. And thanks to Brett there are plenty of them around me, so I get to eat there pretty much whenever I want to. So I want to start by having Brett just tell us a little bit about yourself, about CAVA, kind of how you see the industry that you're in, and then in particular, who are your primary stakeholders, the people that you think about day in and day out is critical to the success of your business.
Brett Schulman 0:43
Yeah, Scott, thanks for having me. It's great to be with you. I'm Brett Schulman, the CEO and co-founder of CAVA. We are a Mediterranean culinary brand and began about 14 years ago as a single full service restaurant, and then evolved by selling our popular dips and spreads that were served in our restaurants in a couple of local grocery stores Whole Foods markets, and then took elements of both of those to bring them to a wider, larger audience in our fast format, which we've now grown to over 106 locations across the country. And really, pre COVID what we saw and what we were investing against, we've seen accelerate and amplified by COVID. And we'll talk about some of the trends we believe will stay post COVID. And the stakeholders we think about or I think about on a daily basis are really our guests, our team members, and then our investor partners, and how we grow the business successfully.
Scott Case 1:48
Awesome. Well, let's talk about the transition in the pandemic. We all were scrambling to figure out how do we operate a business, and you obviously had your share of challenges, a lot of frontline workers, the people delivering for your guests on a day to day basis. What were the biggest transformational things you had to do to go from pre pandemic to the early part of the pandemic and sort of how has that evolved throughout running the business during that time?
Brett Schulman 2:21
Yeah, well, our mission is to serve a brighter future, both for our team members and our guests. And so we use that as our compass, both pre COVID and then once the pandemic hit. And when the pandemic hit, it was really thinking about the safety of our team members and our guests first and foremost. So we closed dining rooms before they were mandated. Obviously, our team members PPE, got out transparent communication to our guests on how they could expect to interact with us and the safety measures and precautions we were taking. And then second from an access point, how are they going to get the CAVA that they craved or that you craved? How are you going to get it when your normal ways you were interacting with us were being inhibited by the pandemic. So we started thinking about creating new access points and meeting you potentially where you are or opening up points of access that didn't exist prior to COVID.
Scott Case 3:18
So you talked about safety and talk a little bit about the ever changing, both kind of biosafety, you're in the restaurant game, so obviously you had a level of safety in general, right, food safety overall. What has changed as the regulations have been changing to stay compliant? We were chatting, I'm based in Montgomery County, Maryland, there's a different rule here, then there might be in Virginia, or there might be in New York. So how have you had to manage that differently, if at all, from where you were in pre pandemic?
Brett Schulman 3:55
Yeah, I think, again, the pandemic has almost served as an amplifier or an accelerant to so much that was happening pre COVID. We operate in 24 states, so we had full appreciation for the variance in regulations and operating requirements in different states. And when the pandemic hit, obviously, there was another layer to that and pandemic specific regulations, but it was really staying nimble and staying on top of all the changing environments and regulations. But we tried to establish baseline requirements across all our restaurants that were above and beyond what we were seeing in any given municipality.
Scott Case 4:39
So part of your strategy was to almost normalize it at the highest standard so that you could implement that across everybody. Is that a good way of framing it?
Brett Schulman 4:49
Yeah, and that's something we did pre COVID. For example, paid sick leave. We have every one of our team members or states we operate or municipalities to a paid sick leave level of the highest standard, which is California. So we take that standard and bring it across the country, so we don't have differing paid sick leave standards. Because even before the pandemic, we want to support and encourage our team members that if they weren't feeling well, they didn't feel like they were missing out on a shift or any income, that they weren't coming in as a sick employee, they were staying home and that they felt like they could stay home and they were supported with our benefits.
Scott Case 5:28
It's interesting, I think pre pandemic that kind of dialogue would have been framed as much about the economic welfare of the employee. But when you look at the health and safety piece of it that's been elevated to another level, do you really want your CAVA prepared by somebody who's got the flu or is just not feeling well? Probably not. And so, we're much more aware of the health standards that we're maintaining, and that by keeping that employee that team member home, it's better for everybody. So makes a lot of sense.
Scott Case 6:05
You talked about accelerating trends. What are the biggest trends you saw get collapsed inside CAVA and said, Hey, we had a plan to do this over the next n months or years, and we had to do it in weeks instead?
Brett Schulman 6:17
It was access certainly. We stood up curbside pickup, for example. We did not have a curbside pickup, we actually had it in a strategic plan this year to test curbside pickup. But we wound up not only testing it, but rolling it out chain wide in a matter of about 10 days. So that was again so people didn't have to come into the store, that we could bring it out to you, put it in your trunk, have you feel like you could have that contactless interaction and get the CAVA you crave. So that was something that clearly was collapsed.
Brett Schulman 6:52
Delivery was another channel that we had been testing and learning in. But didn't necessarily need to push full hard on delivery from a revenue standpoint. But again, with the understanding that we need to meet our guests where they are and for many of us that was at home, we stood up delivery very quickly, within a couple weeks, and created not only third party marketplace access on one of our delivery partners, but native delivery through our CAVA app so you can just go into the normal CAVA ordering platform and select delivery and have CAVA brought to you. So again, creating those access points in rapid fashion to adjust for the quickly changing needs of our guests due to the pandemic.
Scott Case 7:40
Did you make any adjustments to either the product or the options when you were amping up the third party delivery piece? Not everything travels as well, did you have to make some adjustments there where they might be picking up five orders to go in five different places and it might take an hour for it to get there. Was there anything you needed to adjust in the way that you put the food itself together?
Brett Schulman 8:11
Yeah, so fortunately, our food travels well and holds up in those channels beyond the four walls of our restaurants. But one of the things we did adjust, and again, this was something we accelerated, we had in the plans to test curated bowls. So we're a customized format, the power of customization. But often for people, it takes a couple of visits to find their perfect mix, which is some of the fun of the discovery. But for a new customer that's engaging with us for the first time on a third party marketplace, it may be unfamiliar and they may not understand what works well together. So our chefs put together a curated portfolio of bowls and salads that we accelerated the test and launched early in the summer. So that first time users from a digital channel could opt into a chef curated mix that obviously they could have great confidence in having great flavors that our chefs put together.
Scott Case 9:11
Has the challenge of thinking about access and meeting the customer where they are opened up new ideas that you hadn't considered as even viable or possible in the past? And if so, can you share some examples there that you're considering or maybe you've tested?
Brett Schulman 9:31
I think it accelerates again the thinking of how we view the digital channels. Our mission to serve a brighter future for our guests that comes together through our food and our hospitality, making our Mediterranean cuisine available to a larger audience and the wellness aspect of that cuisine and then the kindness of the hospitality. So how do we think about creating that digital hospitality when it may not be an in store in person interaction. So we launched a new version of our digital application in late December, early January, we did a cascading rollout that really mimics our in store experience versus a typical list menu, where you're just scrolling down a list, and it more feels like you're going down the line of the restaurant. And it has more of a conversational UI user interface. So it feels like a bit more of a human interaction. And we like to say we use technology to enhance the human experience, not replace it. And so really challenging ourselves to think about digital hospitality as more of our customers engage with us that way, was certainly something we accelerated as the pandemic took hold.
Scott Case 10:44
Had you considered that digital hospitality as a priority a year ago?
Brett Schulman 10:50
We definitely had it as a high priority. But certainly it moved up in its priority once the pandemic hit. Again, it certainly accelerated our timeline and a lot of this work to meet the needs of our guests. Again, 10-15 years ago, 20 years ago, people came to us or people came to restaurants. When we first started and opened our first CAVA fast casual, we were digitally enabled. But that has only grown as a component of our business and increased over time. But COVID has now made it clear that if you weren't already, you need to be able to meet your consumer where they want to be met. Now, sometimes that will continue to be at your restaurant. Or sometimes you'll drive up to our restaurant, you were telling me the other day, and you were thinking about going inside, but then you were able to pull up the app because it was snowing outside and pick curbside and have our team member bring it out to you. Some days you might be sitting in your house like you are today, and you want to order delivery and we bring it to you. So just being flexible to all those needs states and meeting you on your terms is more critical than ever.
Scott Case 11:59
I experienced that conversational ordering and it was a surprise. And I was like, Huh, it's interesting, and you had sort of custom emojis for the different product choices that were there. And it'd be interesting to see how different that was, and whether that differentiation plays into it or if not, but I found it to be a kind of a surprise and delight moment as a customer for what it's worth. So, audience of one here.
Brett Schulman 12:29
Yeah, we like to say, we want an experience that has speed and joy. And so we want to find that right balance of speed and joy. And we'll continue to refine features and hone the app to ensure it's intuitive enough to meet that speed demand of the guests, but also injects a good amount of joy. So it doesn't become this joyless transactional experience, which I think many apps today have over indexed on being quote, frictionless, that they've lost the humanity or the brand aspect of who they're interacting with or what they're interacting with.
Scott Case 13:07
Yeah, I find that as a user on all these things, I want more imagery. I want to see the product more and especially if I'm picking components, and I often find myself not knowing what a thing is, even though when I see it, I go Oh, that's what a banana pepper is but is that what it's called, I don't know, there's those little rings are kind of spicy. So it's interesting to see how that evolution of that experience to the customer is going to play out.
Scott Case 13:38
You talked about the in person experience. There was this trend happening prior to the pandemic where in certain markets, ghost kitchens were popping up where there was no storefront, there was just a place where all this stuff was being assembled and it was purely for a digital market. Has that entered into your consideration set as part of your go forward in saying, hey, in some markets, it doesn't make sense to have a retail location because the cost of real estate is so high and the volume of customers that want to show up to a physical location is limited?
Brett Schulman 14:16
Well, at the onset of the pandemic, when the pandemic hit, we had over 100 CAVA ghost kitchens. But, we've always had what we call our second make line, our digital kitchen within our CAVA restaurants. So we have our in store serving line and then we have our second digital kitchen within our kitchens that allows us to support a lot of that digital demand. I do think as we look at our real estate strategy in the future, and we think about kitchen production, we think about it in terms of our physical and digital channels and think about where that demand is and the intensity of that demand and how we orient our physical kitchen production to support that demand. So in a more urban area or dense area, you could see us have a more digital kitchen only supporting our quote, e-commerce demand, versus physical demand that we may have a storefront in a more prime location to satisfy that physical demand of somebody walking in and having a meal and sharing a meal with us in our dining room.
Scott Case 15:21
Have you seen your customer persona types and or day parts change? And you talked a little bit about having, I think you called it sort of curated options or composed options for a new customer who is maybe experiencing CAVA for the first time on the app? Have you seen persona shifts in terms of percentage in day parts? And has that driven any changes in the business as a result?
Brett Schulman 15:51
Yeah, there's been a huge day part shift from lunch into dinner. And, as people work from home more and they tend to default to maybe something in their refrigerator during lunches because they're on Zoom all day. And then once Zoom fatigue sets in and they finish their day, and they want to go out and grab some food. We're an intuitive choice at dinner, we grill, we roast, we braise, we cook with fire. And then much of our portfolio is oriented in the suburbs, so as people work from home more, our restaurants are oriented in many locations near where they're now working. We do have urban locations, but that has shifted our mix from lunch to dinner. And we're certainly an intuitive choice there. Back at the end of 2018, we acquired a company called Zoe's Kitchen that had a 90% suburban portfolio of real estate. At CAVA were about 60% suburban, 40% urban, but even back then we saw the early population migration trends of people moving out of kind of high cost of living coastal big urban environments, and moving to whether it's second tier cities, the Sun Belt or the suburbs, millennials starting families, people moving for quality of life or cost of living reasons. And so we kind of doubled down, we had already been signing many deals for CAVA locations in cities like Charlotte and Raleigh and Nashville and Austin, and acquiring our Zoe's Kitchen business allowed us a large portfolio of real estate in that part of the country, in the suburbs, and in the Sunbelt. And COVID has certainly moved more of the business towards the suburbs as well as towards the dinner daypart given those behavior changes of the COVID consumer.
Scott Case 17:41
You talked about the geography, how about the psychographic? You talked about the suburbs, it's dinner, is that family more? Does that mean you've got different options on your menu to cater to a younger audience or a different kind of audience?
Brett Schulman 17:56
Yeah, well, we certainly saw early on and kind of the mid stages of the pandemic, people leaning a bit more into indulgent comfort food. So a lot of crazy feta going into bowls. And we also created a family meal offering because we recognized very early on, families were ordering all at once together and kind of gave them a bulk option that they could put out on their dinner table and share a meal together. So again, it's kind of leaning into your mission, your values and understanding how to use them to solve the problem or the changing needs of your guests. And so when they weren't able to share a meal with us or maybe share a meal together in our restaurant, how do we create an offering where they can then put on their dinner table and share that together versus having just individualized bowls.
Scott Case 18:43
So let's advance down the future a little bit. Two years from now, three years from now, the pandemic is behind us -- What do you see as the biggest factors in that future that either you're planning for or you think other business leaders need to be thinking about as all of these shifts have happened? What do you think sticks? And then we'll come back to what do you think probably fades away.
Brett Schulman 19:11
Yeah, I think certainly contactless convenience is one that sticks and the ability for brands, at least in our industry, to meet our guests where they want to be met. And again, that will be increasingly on the other side of the pandemic back in our restaurants. But people will have the expectation of being able to flow through brands physically and digitally seamlessly. And so making sure you have those digital capabilities to allow you to create those different points of access for your guests where they want it, when they want it, how they want it. I think that absolutely sticks through on the other side. So curbside delivery I think is interesting because clearly it's one of the most relevant channels today, and I think it's slightly inflated due to the specific needs of a pandemic or the COVID consumer. I do think there will be some receding of that post pandemic, certainly as people get back out in the world and want to socialize and re engage, I think we all feel that kind of cabin fever and being pent up. And I think at some point, when there's the all clear, people are going to come back out in droves. So I think you'll see that subside somewhat. But will still remain a channel that's relevant, again, in certain needs states in certain situations, that as a brand we want to be relevant to, it may not be as much as it is today, but it will carry over. And I think from a geographic standpoint, as I mentioned, people again, we'll come back to the urban core and the urban environments. But I do think it will be a bit more of a hybrid model where it's not a zero sum game that people are going to work remotely for good or people will all come back to the office, I think it will be a bit of a mix. So if people are spending a little bit more time working from home, again, that's going to create a mix shift a little bit more towards suburban environments, and a little bit more in the dinner day part than it was pre COVID post COVID.
Scott Case 21:17
You brought up the delivery piece and you talked about your app and sort of really merchandising your product, right? And do you see the third party apps shifting to giving you more control over that experience so that when you're ordering from CAVA on a third party app, you're getting more of a CAVA like experience? How do you see that tension resolving because the bursts and surge command capacity that the third party delivery systems have is very hard to match as an individual property, but at the same time, you're losing a little bit of that customer experience that you want to have as much influence on as you can?
Brett Schulman 22:01
Yeah, we view them as partners in marketing platforms in the sense of customer acquisition? Yeah, they're exposing us to their customer base or new customers that we can expose them to CAVA and hopefully convert them to our direct channels, and create that CAVA specific experience and incentivize them that it's going to be a more robust experience and they can opt into our loyalty pool and get rewards through interacting with us directly.
Scott Case 22:30
Awesome. All right. Well, we're gonna wrap up, I have one more question for you, which is, what as a leader would you recommend other leaders pay particular attention to now and in the sort of near future about this next shift from the world we're living in today to what is likely to be a post pandemic future? What are the things that you're paying attention to or you advise others to pay particular attention to from a customer behavior or team behavior standpoint?
Brett Schulman 23:00
Well, we like to say that the world is becoming more and more accelerated, right? The business world, the world we live in, things are happening, innovation at a faster pace, things are changing at a faster pace, and so I think it's an imperative to stay true to your mission and how your mission relates to the need or the problem you're solving. Stay laser focused on that because it's so easy in an accelerated world to chase shiny pennies, because they're coming at you left and right all the time. And so cutting through that, filtering through that and staying on a core compass heading, and then understanding how that relates to the changing environment. But staying true to that core mission will keep you on the right ultimate compass heading versus getting pulled in too many different directions and then getting off course.
Scott Case 23:51
I absolutely love that. I thought your comment at the beginning about how you applied your values that you had embedded in your business to the changing landscape in the immediacy of the pandemic, throughout the pandemic, and as you look to the future. I think it's really, really sage advice. Brett Schulman, thank you so much. Brett's the CEO of CAVA, really appreciate you being here for us, and we'll catch everybody on the next episode. Thanks everybody.
Brett Schulman 24:16
Thanks, Scott. Thanks, everyone.
Scott Case 24:19
Thanks for tuning in to this episode of Founders Focus. What did you think? You got any feedback for us? Got a topic that you'd like us to discuss, or maybe a future co host? We'd love to hear from you. Just hit me up on LinkedIn at T Scott Case. And join us at foundersfocus.com to stay up to date with the latest episodes and join us live every week at our Founders Focus sessions. Hope to see you there.