When it comes to building a robust investment portfolio, diversification is key. Investors often focus on grouping stocks by sectors or industries, but sometimes, the most valuable insights come from comparing seemingly unrelated companies. Cava (CAVA), a rapidly growing fast-casual restaurant chain, and Realty Income (O), a real estate investment trust (REIT) specializing in retail properties, might appear to serve different purposes. Yet, both provide unique opportunities for investors to capitalize on retail and restaurant trends. This comparison explores how these two companies cater to varying investment goals—growth potential and long-term stability—helping you decide which fits your portfolio best.
Both companies operate in different industries and cater to different investor objectives. Here’s why understanding their business models and growth trajectories is essential for making informed investment decisions.
What Does Cava Do vs. Realty Income?
Cava is a Mediterranean-themed fast-casual restaurant chain that has garnered immense popularity in recent years. Its appeal lies in offering fresh, healthy meals in a quick-service environment. Cava’s same-store sales growth of 18.1% is a staggering figure in the restaurant industry, where low single-digit growth is usually considered strong. The company’s expansion is noteworthy, increasing its store count by over 21% year-over-year to 352 locations. With comparisons being drawn to Chipotle Mexican Grill, which operates more than 3,600 locations, Cava’s growth potential seems massive.
Realty Income, on the other hand, is a REIT specializing in leasing properties to a diverse tenant base. Roughly 73% of its rents come from retail properties, including restaurants. While less than 10% of its total rent roll comes from quick-service and casual-dining restaurants, Realty Income benefits from its diversification. Its model is less about betting on individual restaurant success and more about ensuring steady rental income across a wide range of tenants.