It's tough to recommend an expensive stock in a challenged industry-but Cava Group is just too tasty to pass up.

We'll be honest. When we started looking at Cava, we thought we had all the ingredients for a bear case. The restaurant industry is struggling with high inflation that is simultaneously raising input prices and stretching customer wallets. Yet even after a huge drop for the stock, Cava's valuation, at a forward price/earnings ratio of 77, remains way too high. Right?

Wrong. The company is growing very quickly, opening up 17 restaurants in the second quarter, even as it grew same-store sales by 9%. According to Placer.ai data, Cava saw foot traffic grow by 2.5% year over year in August-which doesn't sound like much, until you realize that the overall fast-casual category saw growth of just 0.4%.

Importantly, the company's new locations-it plans to open 75 to 77 this year-have been strong out of the gate, reports R.J. Hottovy, Placer.ai's head of analytical research. This either implies "that the company has done a good job building its brand ahead of expansion plans, or that there is a lot of demand for Mediterranean concepts," he says.

After all, Cava is already the largest Mediterranean food chain in America, and is often entering markets where there is little competition. The comparison that the bulls bandy about is to Chipotle Mexican Grill, which introduced fast, fresh Mexican food to much of America. That thesis seems intact.

Cava is "a category leader still in its infancy," says Seaport analyst Eric Gonzalez, who initiated coverage with a Buy rating this month in a note unfortunately titled "Feta Believe It's Worth Buying the Dips at This Spread."

The stock chart is wild. After going public at $22 per share in 2023, Cava rose to $150 in 2024, for a market capitalization of $17 billion. But the flaming meatball cooled off, and Cava shares are now at $53, after falling 40% from their June 2026 highs.

Perhaps miffed by this decline, Cava recently made the decision to buy back $100 million worth of shares, a move that seems surprising for a fast-growing, richly valued company. The company declined to provide us with an explanation, but the move does highlight that Cava is now generating a great deal of free cash flow even as it expands, and has no debt to speak of.

"They are one of the better stories in the restaurant industry right now," Hottovy says.

If you're skeptical about restaurants in general, obviously Cava isn't for you. But for growth investors who are trying to widen their portfolios beyond artificial-intelligence plays, the stock looks like a great pick right now.