Title: Switch Up Your Pizza Game: Why This Explosive Growth Stock Could Beat Domino's Pizza
Domino's Pizza (DPZ) garnered attention recently, finding a spot in Berkshire Hathaway's portfolio. Although Buffett often steers investment decisions, the small addition of Domino's shares might have been handled by one of Berkshire's two other investment managers - Ted Weschler or Todd Combs.
Domino's is a successful, globally-present company with 21,000 locations, but its growth potential may not be as vast as other restaurant stocks. This is because of its debt and the fact that it's a more mature business.
However, if you're on the lookout for restaurant stocks offering significant growth potential over the next 10 to 15 years, consider Cava Group (CAVA). This Mediterranean fast-casual restaurant chain showcases serious resemblances to the once-booming Chipotle Mexican Grill (CMG).
Both companies share a focus on using high-quality ingredients while preparing meals in an assembly-line fashion, ensuring customer satisfaction and shortening wait times. This approach also reduces food waste and contributes to impressive restaurant-level margins.
One of Cava's standout features is its strong growth. Last quarter, its same-store sales surged by 18.1%, skyrocketing from a 14.4% boost a year before. Cava's guest traffic grew impressively, despite a substantial price hike, showcasing its powerful pricing power.
Like Chipotle and other QSRs, Cava has used menu innovations and limited-time offers to attract customers. Its popular grilled steak and garlic ranch pita chip LTO have been significant drivers of traffic.
Cava's great same-store sales growth has led to substantial average unit volumes (AUVs). At $2.8 million, its AUVs are not too far behind Chipotle's $3.2 million AUV. Higher AUVs and RLMs contribute to higher profits.
Cava's impressive growth projections are what truly excites investors. By the end of 2025, it plans to open between 56 to 58 new locations and grow by 17% in 2025, aiming for 15% annual growth thereafter. This could potentially see Cava having similar numbers of restaurants to Chipotle in a decade.
Although Cava's stock currently appears pricey, with a robust future growth potential, long-term investors may consider investing in this promising growth stock at modestly lower prices.
In the realm of finance and investing, Cava Group's impressive growth trajectory has attracted the interest of potential investors. If one is looking to invest in restaurant stocks with significant growth potential over the next decade, Cava's focus on high-quality ingredients, menu innovations, and strong same-store sales growth could make it an attractive option, even with its currently pricey stock.
