The Simple Reason Why Cava Group Won't Be the Next Chipotle

Restaurant stocks don't often captivate the market, but one recent initial public offering (IPO) is getting a lot of buzz. Cava Group (NYSE: CAVA), a fast-casual chain known for Mediterranean food, saw its shares pop in its June IPO and then surge again this past week after a chorus of analysts weighed in with buy ratings after the quiet period ended. 

Cava has inspired a number of comparisons to another hot restaurant stock, Chipotle Mexican Grill (NYSE: CMG), for its menu, business model, and even its financial numbers. Like Chipotle, Cava offers a menu of customizable ingredients, allowing patrons to mix and match proteins, vegetables, and dips, ordering a bowl or a rolled-up pita sandwich that looks like a burrito.

Similar to Chipotle, all of Cava's restaurants are company-owned, a rarity in the fast-food industry as neither one franchises nor licenses its restaurants with the exception of one licensed Cava location. Even the aesthetics of Cava restaurants are reminiscent of Chipotle with an industrial minimalist look, and the restaurants are similarly sized at around 2,500 square feet on average.

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Source Fool.com