Better Buy: Cava vs. Sweetgreen Stock

Core Insights - Cava Group and Sweetgreen are both emerging fast-casual restaurant chains focusing on healthy, eco-conscious meals, with Cava specializing in Mediterranean cuisine and Sweetgreen in salads [1][12] - Both companies are relatively new IPOs, making their financial track records limited and subject to inflationary pressures [2] Financial Performance - Cava reported a Q1 sales growth of 30.3% year-over-year, while Sweetgreen achieved 26% [3] - Cava's same-store sales growth was 2.3%, compared to Sweetgreen's 5% [3] - Cava has a total of 323 restaurants and opened 14 new locations in Q1, while Sweetgreen has 225 restaurants with 6 new openings [3] - Cava's full-year new restaurant guidance is 52, while Sweetgreen's is 25 [3] - Cava's net income for Q1 was $14 million, reflecting an 800% growth year-over-year, while Sweetgreen reported a net loss of $26.1 million [9] - Cava's restaurant profit margin stands at 25.2%, with guidance of 24%, whereas Sweetgreen's margin is 18% with guidance of 19% [9] Market Sentiment and Valuation - Cava has consistently beaten Wall Street's earnings expectations for the past four quarters, while Sweetgreen has missed expectations in the same timeframe [5] - Cava's price-to-sales ratio is significantly higher than Sweetgreen's, indicating potential overvaluation but also reflecting positive investor sentiment [6] - Both stocks have seen substantial gains this year, with Cava up 90% and Sweetgreen up 123% year-to-date, although they are facing recent pressures due to indications of slowing restaurant spending [11][7] Growth Potential - Cava appears to have a competitive edge over Sweetgreen in terms of growth and profitability, which may enhance its ability to create shareholder value in the long term [12][8]