Many investors have debated whether the better fast-casual restaurant stock is Cava Group (NYSE: CAVA) or Chipotle Mexican Grill (NYSE: CMG). Considering that Cava is following Chipotle's playbook, in the Mediterranean food genre, and is a much smaller company, it is a worthy debate.

However, the calculus changed upon the announcement last week that CEO Brian Niccol would be leaving Chipotle to take over the top job at Starbucks. Niccol was the company's first successful CEO since founder Steve Ellis departed, bringing considerable uncertainty to the fast-casual giant now that he's leaving. Does this all mean investors should should ignore Chipotle in favor of Cava?

Cava's advantage

Cava remains a founder-led company. Brett Schulman co-founded Cava in 2010, rebranding it from a previously existing full-service restaurant and opening the first Cava in its current form in Bethesda, Maryland, in 2011.

In many respects, Cava looks like a "second chance Chipotle," copying the fast-casual concept and the emphasis on healthier foods to launch a Mediterranean food chain.

Moreover, Cava had only 323 restaurants across the U.S. as of April. This is less than one-tenth of Chipotle's footprint, encompassing more than 3,500 locations as of the end of the second quarter of 2024. Since smaller businesses can more easily achieve high-percentage growth, this factor appears to play into Cava's hands.

Additionally, when it announced plans to go public, Cava outlined a plan to have 1,000 restaurants by 2032, approximately tripling its current number. I foresee rapid growth for years to come.

Why investors might still consider Chipotle

Nonetheless, with more than 3,500 locations, Chipotle is an established and proven business model. Also, Chipotle plans to grow to 7,000 locations in North America. While it does not emphasize its presence outside North America, repeating its success in other countries could take the restaurant count far above 7,000. In contrast, Cava has not outlined any international plans.

Moreover, even though its long-term future leadership is unknown, Niccol has left his successor in a strong position. (Scott Boatwright, Chipotle's chief operating officer, will serve as interim CEO.) Niccol innovated with Chipotlanes and improved the company's processes, ending the E coli outbreaks that hurt Chipotle's reputation and stock price. Hence, its transition to new leadership stands a high likelihood of succeeding.

Despite being more established, Chipotle's stock sells at a discount to Cava's. As a newly profitable company, Cava's P/E ratio will not adequately reflect its valuation. Cava stock trades at a price-to-sales (P/S) ratio of nearly 12. In contrast, Chipotle stock sells at less than 7 times its sales. That factor alone will probably convince some investors that Chipotle has a higher potential for returns.