Nov 27, 2023 · 1h 16m · how-i-built-this
CAVA: Ted Xenohristos and Brett Schulman
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of How I Built This, host Guy Raz interviews CAVA co-founder Ted Xenohristos and CEO Brett Schulman about transforming a single struggling Greek taverna into a nationwide, publicly traded fast-casual Mediterranean powerhouse.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 30.6% of the talking time here. How this is scored →
Guy as informed peer 2.8 Guest teaching 2.7 Guest disagreement 0.3 Guy pushing back 0.9
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 1:11:31 Ted rejects the premise that an early cash buyout was tempting
When Guy Raz suggests an early venture buyout offering significant cash must have been attractive, Ted firmly dismisses the framing, asserting that cashing out was never their motivation.
Hardest push from Guy ▶ 35:15 Guy Raz challenges Brett on working for worthless equityGuy Raz directly interrogates Brett's rationale for consulting for equity in an unprofitable small-batch dip business that was practically worth nothing.
Biggest teaching moment ▶ 36:15 Brett schools on precision food manufacturing unit economicsBrett educates the host on food manufacturing realities, explaining how knowing costs to the third decimal point and implementing bill-of-materials batch tracking was necessary to fix CAVA's margins.
Guy holds their own ▶ 20:05 Guy Raz contextualizes banking consolidation trendsGuy Raz demonstrates institutional knowledge of the financial sector, explaining how bank consolidations have largely eliminated the small community relationship loans that saved CAVA.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| Introducing CAVA and the High-Risk Restaurant Business | 0 | 0 | 0 | 0 | Introductory monologue by Guy Raz framing the restaurant industry failure statistics and CAVA's founding backstory. Host-side scores are zeroed out for monologue. | |
| Ted Xenohristos on Childhood and Greek Roots | 4 | 2 | 0 | 0 | Guy Raz demonstrates familiarity with local Maryland landmarks, recognizing Tally Ho Restaurant in Potomac and its diner menu. Ted shares memories of his parents and Greek lunches at school. | |
| Forming the Founding Trio and Gaining Experience | 4 | 3 | 0 | 0 | Raz tracks the founding trio's early restaurant jobs at Olazzo and Tel Aviv Cafe in Bethesda. Ted explains how Greek cuisine prioritizes ingredient quality over French-style technique. | |
| Securing the First Space in Rockville | 2 | 2 | 0 | 1 | Ted details acquiring the failed Russian bakery in Rockville by paying the landlord back rent with cash advances from maxed-out credit cards. | |
| DIY Buildout and Renovation Safety Hazards | 2 | 3 | 1 | 2 | Ted describes the hazardous DIY buildout, including unpermitted electrical work and dissolving tile glue with muriatic acid in flip-flops. Raz playfully presses him on permit legality. | |
| Grease Hood Crisis and Community Bank Lifeline | 4 | 3 | 0 | 0 | Ted recounts failing the grease hood inspection and getting saved by a local community banker who lent money based on character. Raz adds commentary on how bank consolidation has reduced relational community lending. | |
| Opening Cava Mezze and Early Operational Struggles | 3 | 4 | 0 | 1 | Ted explains early operational blunders, like sticky notes melting off order wheels and failing to account for octopus cooking shrinkage in their menu pricing. Raz probes into initial unit economics and losses. | |
| Mid-Show Break, Sponsor Messages, and Listener Memo | 0 | 0 | 0 | 0 | Mid-show sponsor messages and listener voice memo. Scores zeroed for ad break. | |
| Venturing into Retail Dips and Production Hurdles | 2 | 3 | 0 | 1 | Ted describes their clumsy foray into selling packaged dips to grocery stores, using blowdryers for plastic sealing and having unrefrigerated shipments rejected. Raz questions whether the endeavor was worth the headache. | |
| Brett Schulman Joins as Equity Partner and CEO | 4 | 4 | 1 | 2 | Brett Schulman joins and explains instituting strict manufacturing BOMs and margin accounting. Raz pushes on why Brett would accept worthless equity in an unprofitable dip sideline. | |
| Pivoting to the Fast-Casual Assembly Line Model | 3 | 3 | 0 | 1 | Brett and Ted describe pivoting to an assembly-line fast-casual model to lower labor costs and highlight commissary dips. They discuss iterating the Bethesda location away from looking like a bland salad bar. | |
| Tyson's Corner Stumbles, Community Days, and Growth | 3 | 3 | 0 | 2 | Brett recounts the empty opening at Tysons Corner Mall, pioneering the 'Community Day' free food model, and getting a lucky break when a regional derecho knocked out home power. Raz questions expanding to distant LA so early. | |
| Sponsor Message: Eight Sleep Pod Cover Promotion | 3 | 3 | 0 | 1 | Following an ad break, Ted explains the operational grind of opening in Los Angeles with remote commissary supply lines and severe construction delays. Raz questions how they generated initial awareness. | |
| Acquiring and Turning Around Zoës Kitchen | 4 | 4 | 1 | 1 | Brett and Ted detail acquiring 240+ struggling Zoës Kitchen locations, discovering negative 12 percent comp declines upon closing, and ruthlessly trimming non-Mediterranean items like pimento cheese despite customer backlash. | |
| Company Culture, Employee Support, and Founder Trust | 3 | 4 | 1 | 2 | Raz probes how CAVA maintains frontline hospitality versus mega-chains. Brett details solving kitchen friction by sourcing pre-sliced vacuum onions, while Ted emphasizes founder trust in Brett when turning down buyout offers. | |
| CAVA's Public IPO and Reflections on Success | 3 | 2 | 0 | 0 | Guy Raz asks his signature luck versus skill question following CAVA's 2023 public offering. Brett and Ted reflect on hard work, counterintuitive bets, and frontline staff contributions. |
Statements from this episode (16)
Xenohristos: Greek cuisine relies on ingredient quality rather than technique
“Greek cuisine was never technique driven like the French or the Italians or Japanese, right? It was always about the quality of ingredients.”
Xenohristos: CAVA founders maxed personal credit cards for first lease
“We took all our credit cards, our personal credit cards, and we just pulled money off them. Withdrew cash. We, Basically maxed them out and we were able to come up with that, that money to pay the landlord off.”
CAVA founders built their first restaurant location for around $10,000
“But I'm telling you, we built this thing for right around like 10 grand.”
Xenohristos: Initial Cava loan collateral was worth less than loan amount
“Well, there was no collateral except for the restaurant itself, so there was a lien on the restaurant, which, like I said, I mean, we built that place for 10 grand, so the collateral's Less than the loan was gonna be, so.”
CAVA founders underpriced early menu items by forgetting ingredients shrink when cooked
“We were bringing an octopus and let's just say the octopus weighed 40 pounds. We would divide that by the ounces that we served, and we were like, great, we can serve octopus for six bucks. Well, we didn't take into account that once we cooked that octopus off…”
Bank pulled CAVA's second restaurant loan during 2008-2009 financial crisis
“We had a loan for that restaurant, and the bank eventually pulled it because of the collapse, and so we were in a tight spot, like things were not going well.”
CEO Brett Schulman warned CAVA's founders against giving him 25% equity
“I remember, you know, to his credit, he looked at me and he actually told me that that was, that's actually a bad decision. That's bad. You know, he's trying to give me good, good advice as a business partner already. Like, that's not a good thing to just give…”
CAVA funded unprofitable dips retail business using restaurant profits
“So the restaurants were making profit. The dips, of course, were not. We were funding those with the restaurant profit, but, you know, we were starting to see the light at the end of the tunnel coming out of that whole economic collapse of oh, eight, oh nine.”
Schulman: Walk-the-line formats create labor efficiencies that fund premium ingredients
“And one of the things that struck me that really helped us make the decision was that the walk the line format allowed very efficient labor costs. You know, it's the old Henry Ford production line. That allowed you to invest in high quality ingredients”
Schulman: CAVA's Mosaic location opened at twice previous locations' run rate
“And we had two hour long lines and the restaurant opened, you know, for its regular service the next day at twice the revenue run rate of the other restaurants that had opened and the other restaurants all started to grow in concert with it.”
Panera founder Ron Shaich helped engineer CAVA's acquisition of Zoës Kitchen
“Zoës had approached him, and he said, you know, what do you think about if our investors put together the capital, we acquire it, and give it to you, Brett, and your team?”
Schulman: Zoës Kitchen had 240+ locations, 100% suburban Sunbelt
“Oh, over 240 locations. And a hundred percent of Zoe's portfolio was in the suburbs and the Sunbelt.”
CAVA locations generated nearly double the revenue of neighboring Zoës Kitchen stores
“We had a few Kava's that were across the street from a Zoe's, and we were doing almost twice the revenue, and that emboldened us to make that decision, and take Zoe's private.”
Zoës Kitchen's same-store sales plummeted 12% right as CAVA's acquisition closed
“And when we were negotiating the deal, the sales were declining about three to four percent, same restaurant sales, you know, year over year. And I get this report just sent to my inbox, and I open it up, and it's -12.”
CAVA founders collateralized their first restaurants when investors refused to provide capital
“We ran out of money after two restaurants and our investors didn't want to give us any more money. And so we went and took a loan out against everything that we had worked for. We took a loan against our full service restaurants, against these fast casuals”