CAVA Fundamentals Suggest It Could Outperform Chipotle in Fast-Casual’s Next Cycle

The fast-casual business model has been a success in the retail sector. Still, of course, there is one king in it that will always have new up-and-comers breathing down its neck; that king is Chipotle Mexican Grill Inc. However successful Chipotle has been in recent years, its size seems no match for today’s tariff and inflationary environment, as the company is going into a phase that Wall Street calls ex-growth.

This suggests the company’s valuations risk being seen as “too high,” which the stock price has reflected recently. However, the restaurant model isn’t useless—far from it. The success of this fast-casual restaurant shows why investors view Chipotle as a model for other brands to follow.

That is where shares of CAVA Group Inc. come into play as a potential replacement. This replacement is far from going into this ex-growth phase, as it seems the brand’s best days are only ahead of it right now. Zooming away from price action, several fundamental points serve as evidence that CAVA is a dip buy, the same ones that signal it could also outperform Chipotle in the coming quarters and even years.

CAVA’s Positioning Against Chipotle

Over the past quarter, Chipotle and CAVA have declined by 23% and 18%, respectively, enough to scare most investors away from considering them for their portfolios. However, as seasoned investors know, when everyone else is driven by fear, the best opportunities tend to show up for the bold ones.

CAVA trades at 39% of its 52-week highs, while Chipotle is at 62%, indicating less downside for CAVA and reflecting how much Chipotle could fall.

More than that, CAVA is a $7.7 billion company. In comparison, Chipotle is a much larger company, valued at $55 billion, meaning the percentage gains could be achieved more easily in CAVA than in Chipotle. That being said, investors need to consider other business fundamentals, such as key performance indicators (KPIs), in this race against one another, which justifies CAVA over Chipotle.

One’s Hot, the Other One Is Cooling

The main KPI investors look at is revenue, and here is where the two fast casual brands begin to fall apart. CAVA, in its latest quarterly earnings results, reported an annual revenue growth rate of 20.3%. In comparison, Chipotle fell significantly behind at only 3%.

Both of these brands implemented price increases in reaction to tariffs. However, only CAVA was able to retain customer demand and loyalty despite charging higher rates. Chipotle couldn’t say the same, which is a fundamental warning to consider for a further potential selloff.

Moreover, same-store sales (a more accurate measure of ongoing demand in the industry) expanded by 2.1% for CAVA, diverging from net revenue growth due to the addition of 16 new locations opened during the latest quarter. The sheer number of new locations also indicates future demand expectations in this leading brand.

On the other hand, Chipotle saw its same-store revenue contract by 4% for the same period, even though it also opened 61 new locations. CAVA is expanding into healthy and organic demand growth, while Chipotle might have misread and overshot its demand forecasts.

Ultimately, despite the size difference, CAVA reported restaurant-level margins of 26.3% compared to Chipotle’s 27.4%. Despite Chipotle’s longer presence in the market and wider reach across the U.S., these two are very close, indicating that CAVA is more efficient at managing its smaller operations—beneficial for investors.

Where CAVA Might Go Next

Despite its dismal performance this year, CAVA analysts remain bullish on the company’s future, driven by the strong fundamentals that underpin it. State Street, an institutional buyer, justified adding 5% more to their CAVA stock holdings as of August 2025, bringing their current position to a high of $214.2 million or 2.2% ownership. This act should further prove that investors should consider adding some CAVA stock to their portfolios now.

All told, it also seems short sellers are having a hard time coming up with reasons to keep their short positions open, as 11.8% of the stock’s short interest declined over the past month alone to show initial signs of bearish capitulation, realizing that there isn’t much more downside left compared to how much this company could shoot up by.

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