Cava rated Overweight on its potential to define Mediterranean fast casual

Investing.com -- KeyBanc Capital Markets initiated coverage of Cava Group with an Overweight rating and a $100 price target, arguing the fast-growing chain has the brand, returns and white space to build a long-term growth story similar to Chipotle’s.

Cava, with about 400 locations and roots in the 2018 acquisition of Zoës Kitchen, is the “clear leader” in the still-nascent Mediterranean fast casual segment, the brokerage said.

Its nearest rivals are far smaller and more fragmented, giving the company room to define the category as it expands beyond its largely suburban base.

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KeyBanc said store-level margins in the mid‑20s% and more than 50% new unit returns make Cava’s expansion one of the most capital-efficient in the sector.

Same-store sales, which surged 13.4% this year, are likely to normalize to mid-single digits, but revenue growth should stay above 20% given high-teens unit expansion.

The firm acknowledged that Cava trades at a steep premium, 115x 2026 EPS, but said latent pricing power and efficiency gains could drive long-term upside.

Its valuation is still among the priciest in the restaurant group.

A proprietary survey found that Mediterranean food is still not top of mind for most U.S. consumers, but KeyBanc views that as an opportunity, not a hurdle, as brand awareness has climbed steadily over the past two years.

The firm said current consensus estimates already reflect a reinvestment cycle, which could position the brand for sustainable share gains and potential upward revisions to earnings forecasts.

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