Sharp analysis on the unit economics breakdown. The ROIC at 14.6% is solid but the real question is whether they can maintain those margins as they push into seconday markets where real estate costs vary widely. I tried CAVA once and the customization model works well, but dunno if mediteranean will have the same mass appeal as Mexican food in smaller cities. The Chipotle comparison is useful but might be overly optimisitc since burritos have decades of cultural adoption here.
All great points. I will be curious, myself, if these profit margin trends can persist with the expansion. Labor and occupancy should come down as they move into secondary markets.
But yes, I don't think they have the same potential as Chipotle. But my forecast also doesn't have them expanding to nearly that level.
Another year's numbers will help. 2023 was distorted due to the conversions of Zoe's Kitchen locations. So 2024 was probably the first year of clean data. 2025 will help in forming an opinion on trend. I think we'll know for sure in the next couple of years if there's any real uptake in tier 2 & 3 markets.
Sharp analysis on the unit economics breakdown. The ROIC at 14.6% is solid but the real question is whether they can maintain those margins as they push into seconday markets where real estate costs vary widely. I tried CAVA once and the customization model works well, but dunno if mediteranean will have the same mass appeal as Mexican food in smaller cities. The Chipotle comparison is useful but might be overly optimisitc since burritos have decades of cultural adoption here.
All great points. I will be curious, myself, if these profit margin trends can persist with the expansion. Labor and occupancy should come down as they move into secondary markets.
But yes, I don't think they have the same potential as Chipotle. But my forecast also doesn't have them expanding to nearly that level.
Another year's numbers will help. 2023 was distorted due to the conversions of Zoe's Kitchen locations. So 2024 was probably the first year of clean data. 2025 will help in forming an opinion on trend. I think we'll know for sure in the next couple of years if there's any real uptake in tier 2 & 3 markets.