We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Chipotle Vs CAVA: Which Restaurant Stock Should You Bet On?
Read MoreHide Full Article
Chipotle Mexican Grill, Inc. (CMG - Free Report) and CAVA Group, Inc. (CAVA - Free Report) are two of the most prominent players in the fast-casual dining space. Both are known for their health-forward, customizable meals and strong brand followings. While both have carved out loyal customer bases and continue to expand, ongoing market volatility raises the question: Which stock offers better value and greater upside potential right now?
The Case for CMG
Chipotle, which operates in the United States, Canada, the U.K., France, Germany, Kuwait and the UAE, is committed to using high-quality real ingredients, classic cooking techniques and distinctive interior design to serve customers.
CMG continues to demonstrate robust expansion momentum, underpinned by strong new restaurant economics and strategic international partnerships. In the first quarter alone, the company opened 57 locations, including a mix of traditional formats and Chipotlanes, along with two internationally licensed units. New restaurant economics have been strong, with year-two cash-on-cash returns averaging around 60%. Overall, the company's cash-on-cash return stands in the low 80% range, reflecting ongoing improvements in restaurant performance over time and supporting confidence in its long-term growth objectives.
Internationally, Chipotle is growing through partnerships, expanding to five locations in the Middle East with Alshaya Group and planning its first entry into Mexico via Alsea by early 2026, with potential broader expansion in Latin America and Europe. The brand is also actively building development pipelines in Central London and Germany. Domestically, Chipotle aims to open 315-345 restaurants this year, 80% of which will feature a Chipotlane, and it sees long-term potential for more than 7,000 locations across North America.
CMG is focusing on expanding its digital program to drive growth. The company is leaving no stone unturned to make digital ordering more appealing to customers and efficient for its restaurants. In 2024, digital sales represented 35.1% of total food and beverage revenues. The company focuses on improving order accuracy and timing for its digital business.
However, soft comps, and high commodity and wage are hurting the company. Comparable restaurant sales in the first quarter fell 0.4% against 5.4% growth in the previous quarter. In the quarter, comps were hurt by lower transactions of 2.3%. However, this was partially mitigated by a 1.9% rise in average checks.
Chipotle is bracing for its toughest comparable sales period in the second quarter, which laps 11.2% comps from the prior year. Additionally, the company expects a 90-basis-point decline in pricing benefits and a 100-basis-point headwind from Easter timing. Our model predicts second-quarter comps to decline 2.5% year over year.
The company, like other industry players, has been facing significant supply-chain challenges and inflation across most commodities and categories. In the first quarter of 2025, food, beverage and packaging costs, as a percentage of revenues, came in at 29.2%, compared with 28.8% in the prior-year quarter. The rise in costs was due to inflationary costs across avocados, dairy and chicken.
The Case for CAVA
The company is benefiting from strong momentum in traffic growth, strategic expansion efforts and continued enhancements across its digital and in-restaurant experiences. With a differentiated Mediterranean brand proposition and disciplined execution, the company appears well-positioned to sustain its growth trajectory.
In the first quarter of fiscal 2025, CAVA delivered strong top-line growth, with revenues rising 28.2% year over year to $328.5 million. Same-restaurant sales climbed 10.8%, fueled primarily by a 7.5% increase in customer traffic. On a three-year basis, same-restaurant sales jumped 41.5%, supported by a robust 24.7% traffic gain. The company added 15 net new restaurants in the quarter, bringing its total to 382 locations. Management noted that the newly opened restaurants are outperforming expectations, showing solid results in both sales and margin performance, reinforcing confidence in CAVA's unit expansion strategy.
CAVA’s loyalty program, a key strategic pillar, continues to boost engagement and frequency. Since its reintroduction, the program has delivered notable increases in sales participation, particularly among lower-frequency users, and enabled targeted behavioral influence through point-based reward redemptions. The success of limited-time incentives tied to new menu items, such as the garlic ranch pita chips, underscores the potential of this platform to support innovation and drive repeat visits.
Despite near-term challenges, CAVA maintains a strong commitment to its long-term strategy, emphasizing a clear and compelling value proposition that blends flavor with health. The brand continues to resonate with today’s consumers by offering a menu that aligns with evolving preferences for convenience, quality and experience. Management highlights the strength of CAVA’s unit economics as a key driver of its momentum, supporting both its ongoing expansion and the growing loyalty of its customer base.
How Do Estimates Compare for CMG & CAVA?
The Zacks Consensus Estimate for Chipotle’s 2025 sales and EPS implies year-over-year growth of 8.1% and 8%, respectively. However, earnings estimate revisions for 2025 have witnessed downward revisions of 3.2% in the past 30 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CAVA’s 2025 sales and EPS implies year-over-year increases of 24.3% and 38.1%, respectively. Earnings estimates for 2025 have witnessed upward revisions of 5.5% in the past 30 days.
Image Source: Zacks Investment Research
Price Performance & Valuation
The CAVA stock has gained 0.6% in the past year. Conversely, CMG shares have declined 19.7% in the same time frame.
Price Performance
Image Source: Zacks Investment Research
CAVA is trading at a forward 12-month price-to-sales ratio of 7.42X, below its median of 10.94X over the last year. CMG’s forward sales multiple sits at 5.31X, below its median of 6.16X over the same time frame.
Image Source: Zacks Investment Research
Conclusion
CAVA appears better positioned than Chipotle at the moment, thanks to its accelerating growth momentum, strong customer traffic trends, and effective execution on both digital and in-restaurant fronts.
While Chipotle remains a dominant player with a solid expansion plan, it faces near-term challenges such as soft comparable sales, inflationary pressures and slowing traffic, factors that may weigh on its performance.
In contrast, CAVA is gaining traction with consumers, benefiting from a compelling brand proposition, store openings, and an increasingly effective loyalty program that drives engagement and repeat visits. With rising investor confidence reflected in upward earnings revisions and a more favorable valuation relative to its recent historical range, CAVA offers a more attractive entry point.
CAVA currently carries a Zacks Rank #2 (Buy), but CMG has a Zacks Rank #4 (Sell).
Image: Bigstock
Chipotle Vs CAVA: Which Restaurant Stock Should You Bet On?
Chipotle Mexican Grill, Inc. (CMG - Free Report) and CAVA Group, Inc. (CAVA - Free Report) are two of the most prominent players in the fast-casual dining space. Both are known for their health-forward, customizable meals and strong brand followings. While both have carved out loyal customer bases and continue to expand, ongoing market volatility raises the question: Which stock offers better value and greater upside potential right now?
The Case for CMG
Chipotle, which operates in the United States, Canada, the U.K., France, Germany, Kuwait and the UAE, is committed to using high-quality real ingredients, classic cooking techniques and distinctive interior design to serve customers.
CMG continues to demonstrate robust expansion momentum, underpinned by strong new restaurant economics and strategic international partnerships. In the first quarter alone, the company opened 57 locations, including a mix of traditional formats and Chipotlanes, along with two internationally licensed units. New restaurant economics have been strong, with year-two cash-on-cash returns averaging around 60%. Overall, the company's cash-on-cash return stands in the low 80% range, reflecting ongoing improvements in restaurant performance over time and supporting confidence in its long-term growth objectives.
Internationally, Chipotle is growing through partnerships, expanding to five locations in the Middle East with Alshaya Group and planning its first entry into Mexico via Alsea by early 2026, with potential broader expansion in Latin America and Europe. The brand is also actively building development pipelines in Central London and Germany. Domestically, Chipotle aims to open 315-345 restaurants this year, 80% of which will feature a Chipotlane, and it sees long-term potential for more than 7,000 locations across North America.
CMG is focusing on expanding its digital program to drive growth. The company is leaving no stone unturned to make digital ordering more appealing to customers and efficient for its restaurants. In 2024, digital sales represented 35.1% of total food and beverage revenues. The company focuses on improving order accuracy and timing for its digital business.
However, soft comps, and high commodity and wage are hurting the company. Comparable restaurant sales in the first quarter fell 0.4% against 5.4% growth in the previous quarter. In the quarter, comps were hurt by lower transactions of 2.3%. However, this was partially mitigated by a 1.9% rise in average checks.
Chipotle is bracing for its toughest comparable sales period in the second quarter, which laps 11.2% comps from the prior year. Additionally, the company expects a 90-basis-point decline in pricing benefits and a 100-basis-point headwind from Easter timing. Our model predicts second-quarter comps to decline 2.5% year over year.
The company, like other industry players, has been facing significant supply-chain challenges and inflation across most commodities and categories. In the first quarter of 2025, food, beverage and packaging costs, as a percentage of revenues, came in at 29.2%, compared with 28.8% in the prior-year quarter. The rise in costs was due to inflationary costs across avocados, dairy and chicken.
The Case for CAVA
The company is benefiting from strong momentum in traffic growth, strategic expansion efforts and continued enhancements across its digital and in-restaurant experiences. With a differentiated Mediterranean brand proposition and disciplined execution, the company appears well-positioned to sustain its growth trajectory.
In the first quarter of fiscal 2025, CAVA delivered strong top-line growth, with revenues rising 28.2% year over year to $328.5 million. Same-restaurant sales climbed 10.8%, fueled primarily by a 7.5% increase in customer traffic. On a three-year basis, same-restaurant sales jumped 41.5%, supported by a robust 24.7% traffic gain. The company added 15 net new restaurants in the quarter, bringing its total to 382 locations. Management noted that the newly opened restaurants are outperforming expectations, showing solid results in both sales and margin performance, reinforcing confidence in CAVA's unit expansion strategy.
CAVA’s loyalty program, a key strategic pillar, continues to boost engagement and frequency. Since its reintroduction, the program has delivered notable increases in sales participation, particularly among lower-frequency users, and enabled targeted behavioral influence through point-based reward redemptions. The success of limited-time incentives tied to new menu items, such as the garlic ranch pita chips, underscores the potential of this platform to support innovation and drive repeat visits.
Despite near-term challenges, CAVA maintains a strong commitment to its long-term strategy, emphasizing a clear and compelling value proposition that blends flavor with health. The brand continues to resonate with today’s consumers by offering a menu that aligns with evolving preferences for convenience, quality and experience. Management highlights the strength of CAVA’s unit economics as a key driver of its momentum, supporting both its ongoing expansion and the growing loyalty of its customer base.
How Do Estimates Compare for CMG & CAVA?
The Zacks Consensus Estimate for Chipotle’s 2025 sales and EPS implies year-over-year growth of 8.1% and 8%, respectively. However, earnings estimate revisions for 2025 have witnessed downward revisions of 3.2% in the past 30 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CAVA’s 2025 sales and EPS implies year-over-year increases of 24.3% and 38.1%, respectively. Earnings estimates for 2025 have witnessed upward revisions of 5.5% in the past 30 days.
Image Source: Zacks Investment Research
Price Performance & Valuation
The CAVA stock has gained 0.6% in the past year. Conversely, CMG shares have declined 19.7% in the same time frame.
Price Performance
Image Source: Zacks Investment Research
CAVA is trading at a forward 12-month price-to-sales ratio of 7.42X, below its median of 10.94X over the last year. CMG’s forward sales multiple sits at 5.31X, below its median of 6.16X over the same time frame.
Image Source: Zacks Investment Research
Conclusion
CAVA appears better positioned than Chipotle at the moment, thanks to its accelerating growth momentum, strong customer traffic trends, and effective execution on both digital and in-restaurant fronts.
While Chipotle remains a dominant player with a solid expansion plan, it faces near-term challenges such as soft comparable sales, inflationary pressures and slowing traffic, factors that may weigh on its performance.
In contrast, CAVA is gaining traction with consumers, benefiting from a compelling brand proposition, store openings, and an increasingly effective loyalty program that drives engagement and repeat visits. With rising investor confidence reflected in upward earnings revisions and a more favorable valuation relative to its recent historical range, CAVA offers a more attractive entry point.
CAVA currently carries a Zacks Rank #2 (Buy), but CMG has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.