(Bloomberg) — Of all the hot IPOs over the past year — AI firms and biotech startups and the like — none has popped on Wall Street quite like Cava Group Inc.

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The restaurant chain — the Mediterranean Chipotle, as its financial backers like to call it — has soared more than 300% since its initial public offering in June 2023, giving it a market valuation of over $10 billion. That equates to $33 million for each of its 323 restaurants, a staggering sum even for a chain that’s rapidly expanding. By comparison, investors valued Chipotle Mexican Grill, the benchmark in the US fast-casual restaurant industry, at just about $3 million per restaurant when it completed the one-year mark in public markets. (On a price-to-earnings ratio, Cava is expensive, too, clocking in at 185.)

All of this highlights how the global IPO market is cracking back open after a couple of sluggish years. Bring the right kinds of new stocks to market, like a trendy fast-casual chain, and investors will bid them up.

But the rally has been so extreme that it’s starting to cause angst among some Cava bulls. In the span of just four days, two of the 15 Wall Street analysts who cover the company — JPMorgan Chase’s John Ivankoe and Piper Sandler’s Brian Mullan — cut the stock to neutral from overweight.

The per-restaurant valuation “is unprecedented” in the industry, Ivankoe wrote in his June 3 report. Each location, he noted, currently pulls in less than $3 million a year on average in revenue. He told clients he’d rather buy Chipotle stock at this point, underscoring a broader trend: two-thirds of analysts have buy ratings on Chipotle versus just over half now for Cava.

Some corporate insiders have also recently sold chunks of their Cava stock. For the most part, though, investors remain willing to accept such lofty valuations. Even after a sluggish start to June, Cava is up more than 100% this year. Fast casual is popular with the Wall Street set now, and Cava, as they see it, is the up-and-comer that will trace Chipotle’s arc.

“Investors are willing to pay a premium for these growth-oriented concepts,” said Jim Salera, an analyst who covers restaurant stocks at Stephens. Salera, who doesn’t have a rating on Cava, says they’ll “pay that premium because there’s only a handful of restaurants that are providing growth.”

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For Lauren Balik, the CEO and founder of research firm Upright Analytics, the whole Cava-is-the-next Chipotle narrative is complicated. Yes, she says, Cava could expand rapidly like Chipotle did — the company plans to have 1,000 restaurants in operation within a decade — and business could boom, but that growth brings its own risks. Chipotle struggled to standardize hygienic conditions as it quickly added restaurants, triggering a series of food-poisoning incidents that made national news and cratered the stock in 2015. It took Chipotle a while to fix its procedures, and the stock only began to rebound two years later.

Cava has managed to avoid such problems, opening more than 50 locations in the past year without any notable quality issues. Still, Balik says, it’s a good reminder that rapid growth can cause operational hiccups. She’s betting against the stock, having put on a short trade in January.

“Everyone makes the comparison to Chipotle. If you make that comparison, you have to compare Cava to early Chipotle, which was a similar story,” Balik says. “It opened a lot of new stores, it grew quickly, but the operations and execution in late 2015 didn’t work that well.”

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