Is Cava Group Stock Your Ticket to Becoming a Millionaire?

Key Points

• Cava Group seems to have adapted Chipotle's approach to fast food.

• At a market cap of $10 billion, it is a small fraction of Chipotle's size.

• A relatively high valuation could dampen the stock's growth prospects.

• 10 stocks we like better than Cava Group ›

Given the business model and potential growth trajectory of Cava Group (NYSE: CAVA) stock, investors may perceive it as a second chance for those who missed out on Chipotle Mexican Grill.

Like Chipotle, Cava offers a healthy fast-food alternative, in this case, Mediterranean cuisine instead of Mexican food. Also, its rapid expansion is reminiscent of Chipotle, a restaurant chain that has grown to more than 3,800 locations.

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However, growth investors may want to know whether Cava stock can turn them into millionaires. Let's take a closer look at its current state and growth trajectory to determine whether such growth is feasible.

Image source: Cava Group.

The state of Cava Group stock

As of the end of Cava's first quarter of fiscal 2025 (ended April 25), the restaurant chain had expanded to 382 restaurants in 26 states and the District of Columbia. It also plans to add between 64 and 68 restaurants during the fiscal year.

That increase moves Cava forward on a previously outlined goal of reaching 1,000 locations by 2032. While that would still make it far smaller than Chipotle, it would nearly triple Cava's footprint over the next seven years.

Such growth goals should draw growth investors. Indeed, in fiscal Q1, revenue increased to $329 million, a 28% year-over-year rise. The number of restaurants, which grew 18% over the same period, played a massive role in that increase.

Moreover, the same-restaurant-sales growth of nearly 11% speaks to the chain's rising popularity, and the 33% revenue growth in fiscal 2024 indicates that the increase is not a one-time event.

Additionally, the restaurant consistently generates a profit. Its fiscal Q1 net income of nearly $26 million was almost double that of the year-ago period and likely puts it on track to surpass the $130 million in earnings for fiscal 2024.

Furthermore, investors should not necessarily assume Cava will stop its expansion to 1,000 restaurants. Over time, it could up that target and follow in the footsteps of Chipotle and fast-food giant McDonald's, expanding internationally and dramatically increasing its addressable market.

Challenges to minting millionaires

Unfortunately, such growth may not be sufficient to make millionaires of Cava's investors. Its market cap of $10 billion means it is still far smaller than Chipotle, which has a market cap of about $72 billion. Investors should also consider the growth of McDonald's, whose current market cap is $213 billion.

In other words, if you bought $10,000 worth of Cava stock at today's prices, that would grow to $72,000 if it reached Chipotle's current size and $213,000 if Cava became as big as McDonald's, which boasts more than 38,000 restaurants globally. That would mean Cava falls well short of the $1 million goal.

Admittedly, unlike Cava and Chipotle, McDonald's is primarily a franchise, which may make it a less applicable example.

Still, that difference may not address valuation concerns. Cava currently has a P/E ratio of 72, which is significantly higher than Chipotle at 48 times earnings and McDonald's earnings multiple of 26. Over time, that could dampen Cava's growth, assuming its P/E ratio falls more in line with the S&P 500 average of 30.

Is Cava stock your ticket to becoming a millionaire?

In its current state, Cava stock is unlikely to turn investors into millionaires without a considerable investment.

The problem comes down to its size and growth potential. Minting a millionaire would mean a 100-fold return on a $10,000 investment, and Cava stock does not offer an obvious path for such gains.

However, investors still should remember that Cava stock holds the potential for considerable growth. It is a rapidly expanding restaurant chain that, by all accounts, is on track to meet its 1,000-restaurant goal by 2032 and possibly grow beyond that over time. Assuming it stays on its current track for years to come, the stock can make an investor considerably wealthier.

Should you invest $1,000 in Cava Group right now?

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Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends Cava Group and recommends the following options: short September 2025 $60 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.