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Chipotle Mexican Grill (NYSE: CMG) has emerged as one of the strongest restaurant stocks in recent years. Its success has led to a gain of more than 110-fold over the last 18 years and, subsequently, an upcoming 50-for-1 stock split.

Some hope Cava Group (NYSE: CAVA) is a second-chance stock for those who missed out on Chipotle. Like Chipotle, it is a rapidly expanding restaurant chain specializing in healthy fast food.

Nonetheless, investors also have good reason to believe that Cava will not follow in Chipotle's footsteps. Before assuming Cava is the next Chipotle, investors should consider three factors explaining why they might still want to choose Chipotle over Cava Group stock.

1. Chipotle's proven track record

Chipotle stock's success, which dates back to its initial public offering (IPO) in 2006, is a factor investors should not ignore.

Indeed, investors may not realize exactly what the company has accomplished. For every Chipotle, the market has numerous stocks like Red Robin Gourmet Burgers that have lost value over its trading history. An unproven stock like Cava could suffer the same fate, so investors have to be careful.

Moreover, Chipotle based its food on the popular Mexican food genre, likely contributing to its popularity. Additionally, it focused on fresh ingredients and showed it could offer fast, popular food without compromising health benefits. The fact that it was the first major fast-food chain to succeed with such an approach has likely helped boost Chipotle's stock over time.

2. Remaining growth potential

Furthermore, it may surprise investors that Chipotle may still hold more growth potential despite its nearly 3,500 restaurants.

For one, investors should consider Cava's stated goals. It hopes to expand to 1,000 restaurants by 2032 from the 323 locations it operated as of the end of its first quarter of fiscal 2024 (ended April 21), which would approximately triple its number of restaurants.

In contrast, Chipotle plans 7,000 locations in North America. That amounts to about double the current number.

However, unlike Cava, which has never announced an international expansion plan, Chipotle has locations in Canada and three European countries. If it succeeds in Europe, Chipotle could grow more in absolute numbers and percentage terms. McDonald's, for example, operates in more than 100 countries.

3. The valuation comparison

Additionally, those who hope Cava is the "second-chance Chipotle" are in good company if valuations are an indication. Cava stock has more than doubled in value since its IPO, and as a newly profitable company, its P/E ratio approaching 1,000 does not meaningfully reflect its valuation. Nonetheless, Cava is an expensive stock by nearly any measure.

Its price-to-sales (P/S) ratio is nearly 13, well above Chipotle's 9 P/S ratio. Such a discrepancy is especially notable since Chipotle has typically maintained pricey valuations. Considering that Cava has much to prove, choosing Chipotle over Cava is not only cheaper, but also much less risky.

Staying with Chipotle

Ultimately, considering the businesses and the stocks, investors who missed out on Chipotle's earlier gains are likely better off still choosing Chipotle over Cava, even if it is no longer a small company.

Admittedly, the feeling that Cava is the next Chipotle makes sense amid rapid growth and successes with healthier fast food. Nonetheless, Cava still has to prove itself in a highly competitive industry.

Moreover, its goals are not as ambitious as Chipotle's, meaning Chipotle could still outgrow Cava in both absolute and percentage terms. Given that investors also have to pay a higher valuation for Cava under such conditions, they are likely better off choosing Chipotle.

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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. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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