2 Growth Stocks That Could Skyrocket in 2025 and Beyond

With the recent market pullback, technology stocks have gotten a lot of investors' attention lately, but they are not the only growth stocks that suddenly find themselves at much lower prices. Two restaurant stocks with some of the best long-term prospects are also much cheaper than they were in mid-February.

Coffee shop operator Dutch Bros (NYSE: BROS) finds itself down around 20% from its highs as of this writing, while the stock of Mediterranean fast-casual restaurant operator Cava Group (NYSE: CAVA) has been nearly cut in half. Let's look at why these two stocks could have strong upside for the rest of this year and beyond.

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Gaining popularity

Both Dutch Bros and Cava have become very popular with consumers. This can be seen in their strong same-store sales results and robust average unit volumes (AUVs), which is the average amount of sales each of its locations produces.

Last quarter, Dutch Bros saw its same-store sales jump 6.9%, with transactions up 2.3%. Company-owned stores, which have a greater impact on overall sales and profits than franchise stores, performed even better. Same-store sales for these locations climbed 9.5%, with transactions up 5.2%. The company credited the booming sales to successful limited-time offerings and product innovation.

Cava's same-store growth was even more impressive. Last quarter, the restaurant operator's comparable restaurant sales surged an astonishing 21.2%. Guest traffic soared 15.6%, while the sales were positively impacted by another 5.6% increase from price and mix. It was the third straight quarter of double-digit same-store sales growth for Cava. The introduction of grilled steak this past summer has been a big driver behind the lift in same-store sales.

Both Dutch Bros and Cava's strong same-store sales growth also isn't coming off low bases. Dutch Bros systemwide AUVs were $2 million for 2024. By comparison, Starbucks, which has much larger stores, had North American company-owned store AUVs of $2.27 million last quarter. Cava's AUVs, meanwhile, were $2.9 million in fiscal 2024. For context, Chipotle first surpassed $3 million in AUV in just 2023.

Both companies also have strong avenues to continue to drive their same-store sales. Dutch Bros is testing adding more food options, which currently only accounts for about 2% of its sales. By comparison, food makes up nearly 20% of Starbucks sales, and Dutch Bros has admitted it has likely lost out on sales by not having more robust breakfast options. The company has also just recently enabled mobile ordering and is starting to lean more into its loyalty program.

Cava is also looking to continue to drive its sales through its loyalty program and social media marketing. Culinary innovation, especially with its grilled steak, was a big driver last year, and it expects to continue to lean into this to bring diners to its restaurants. It's also been experimenting with artificial intelligence (AI) video technology to improve digital order accuracy and productivity.

Image source: Getty Images.

Store expansion opportunities

Given their current popularity, the biggest opportunities for both Dutch Bros and Cava moving forward is through store expansion. Both companies are still in their early days of building store bases around the country.

At the end of last year, Dutch Bros had 982 locations, of which 670 were company-owned. The popular coffee shop had locations in 12 states, most of which were in the western part of the U.S. Founded in Oregon, the state is its largest market with 155 locations, with California being its second-largest with 149 stores.

By comparison, Starbucks has more than 17,000 locations in the U.S. alone. It also has more than double the locations in Oregon as Dutch Bros and more than 3,000 coffee shops in California.

Dutch Bros has a huge opportunity over the years not only to expand across the U.S. into new markets but to continue to fill in its current western markets as well. It plans to open at least 160 new locations this year, representing 16% unit growth. But it has decades of strong unit growth ahead.

Cava, meanwhile, has an even smaller store footprint. It had 367 locations in 28 states at the end of last quarter. That is only a tenth of the restaurants that Chipotle operates in the U.S., and Chipotle is still seeing solid unit growth.

Cava has been using what it has called a "coastal smile" strategy with expansion, looking to build its base along the coasts and in the South. However, it has recently started to enter Midwest markets. It is planning to open between 62 and 66 new locations this year, which would represent between 17% to 18% unit growth.

It is ultimately both concepts' popularity, along with their huge expansion opportunities, that make both Dutch Bros and Cava attractive long-term buys. This is what made both Starbucks and Chipotle such great investments in their early days, and both Dutch Bros and Cava have the ingredients to be strong performers for many years to come.

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Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill and Starbucks. The Motley Fool recommends Cava Group and Dutch Bros and recommends the following options: short March 2025 $58 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.