Can a bowl of Mediterranean salad outperform a box of pet kibble? Investors weighing CAVA Group (NYSE:CAVA) against Chewy (NYSE:CHWY) must decide between aggressive physical expansion and digital retail dominance.
CAVA brings a fresh Mediterranean concept to the fast-casual dining scene, while Chewy operates as a leading e-commerce hub for pet parents. Both companies represent high-growth opportunities within the consumer discretionary sector, though they follow very different business models to capture market share.
The case for CAVA
CAVA operates as a growing player among retail stocks, serving Mediterranean-inspired bowls and pitas through a fast-casual restaurant brand. The company manages nearly 440 locations and also sells proprietary dips and dressings within the grocery market. It builds deep customer relationships through a digital ecosystem and a loyalty program featuring tiered status levels that appeal to Millennial and Gen Z diners.
In its latest annual report, filed for FY 2025, revenue reached roughly $1.2 billion, representing a robust 22.4% increase over the $963.7 million reported in the previous year. The company reported a net income of close to $63.7 million for the same period. This indicates a net margin of approximately 5.4%, which measures how much profit is kept from every dollar of sales.
As of its December 2025 balance sheet, CAVA maintains a debt-to-equity ratio of approximately 0.6x, a metric that compares total debt to shareholder equity to show how a company funds its growth. Its current ratio of 2.7x suggests the business can easily cover its short-term bills using assets due within a year. Free cash flow reached nearly $26.1 million, which is the cash remaining after paying for operations and capital expenditures.
The case for Chewy
Chewy provides a one-stop digital shop for pet food, medication, and healthcare services for millions of households across North America. Its primary driver is the Autoship subscription program, which generates reliable recurring revenue and builds long-term customer loyalty by automating repeat orders. Beyond physical products, the company is expanding into services like pet insurance and telehealth through its CarePlus and Connect with a Vet programs.
In its latest annual report, filed for FY 2025, Chewy generated revenue of approximately $12.6 billion, reflecting growth of nearly 6.2% over the previous fiscal year. The company reported a net income of close to $222.8 million for the fiscal year, which was a decrease from the prior year. This resulted in a net margin of roughly 1.8%, representing the percentage of total revenue that remains as profit after all expenses are paid.
Based on the balance sheet dated February 2026, Chewy has a debt-to-equity ratio of approximately 1.1x and a current ratio of nearly 0.9x. This debt-to-equity ratio measures how much leverage the company uses, while the current ratio indicates if assets due within a year cover immediate liabilities. Free cash flow reached nearly $562.4 million, though note that stock-based compensation represented roughly 45% of operating cash flow, which inflates reported cash generation since SBC is a non-cash expense added back in the cash flow statement.
Risk profile comparison
CAVA faces significant competitive pressure in the restaurant industry from fast-food chains, grocery stores, and food delivery services. Operational risks include the challenges of site selection and managing construction costs while rapidly scaling the business. The company also maintains a supply chain dependency on third-party producers for essential ingredients like chicken and olive oil.
Chewy faces intense competition from massive online retailers like Amazon (NASDAQ:AMZN) and various pet specialty stores. The business must manage complex logistics across its fulfillment center network and remains dependent on third-party suppliers for its private brand products. Cybersecurity risks are also a factor as the company relies heavily on cloud-service providers to maintain its digital infrastructure.
Valuation comparison
Chewy appears significantly cheaper than CAVA based on its Forward P/E, which measures price against future earnings estimates, and its lower P/S ratio.
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy in 2026?
I’d go with CAVA. The scale of the opportunity it is chasing and the pace at which it is capturing it put it in a different category from Chewy entirely. CAVA is in the middle of one of the more impressive restaurant growth stories in the market right now, with sales surging well into double digits and traffic climbing. New restaurants are opening at a healthy pace with strong early results, and management raised its full-year outlook after a standout quarter. The brand still has a long runway of states and markets left to enter, which gives it years of predictable expansion ahead.
Chewy, to its credit, is a well-run business with a loyal customer base that keeps spending. Autoship sales account for the vast majority of revenue, and the expansion into pet health adds a new dimension to the story. For investors who want a steady, predictable consumer business, it has its appeal.
But Chewy is growing at a modest pace in a pet market under pressure from cautious consumer spending. CAVA is growing fast in a market that is still wide open. For a long-term investor, a brand still in the early stages of national expansion is a harder opportunity to pass up than a mature e-commerce business delivering modest gains.
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Sara Appino has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Cava Group, and Chewy. The Motley Fool has a disclosure policy.
CAVA vs. Chewy: Which Consumer Stock Is a Better Buy in 2026? was originally published by The Motley Fool
