Will Chipotle Disappoint Tomorrow?

Chipotle Mexican Grill (NYSE: CMG  ) will be rolling more than just burritos tomorrow. The fast-growing chain of Mexican "food with integrity" restaurants reports quarterly results tomorrow.

We know what the analysts think. They see Chipotle's revenue and earnings per share climbing 18% and 30%, respectively. This is spectacular growth in any industry, but it's particularly impressive in the cutthroat dining segment, where even the world's largest operator is struggling.

Unfortunately for Chipotle, there have been many unappetizing developments at many of its peers in recent days.

Fast casual has held up better than fast-food and casual-dining concepts, but some of those leaders have been struggling.

Chili's parent Brinker International (NYSE: EAT  ) is a standout in casual dining. It's one of the few table service chains to have posted positive comps during the holiday quarter. However, even Chili's saw its otherwise positive comps in October and November decline during the month of December.

On the fast-food front, McDonald's (NYSE: MCD  ) -- the company that spun off Chipotle nearly a decade ago -- let investors down last week by announcing that domestic comps fell 1.4% during the fourth quarter. 

Chipotle fans will argue that their chain is above the malaise. Folks don't line up 20-deep at a Chili's or Mickey D's. Those respective niches are toast. Casual dining has fallen out of favor as patrons have tired of waiting around for mediocre grub. Fast-food chains offer value, but diners aren't willing to swap quality for the sake of frugality and convenience. There's a reason Chipotle has coasted through positive comps through even the darkest recessionary stretches. However, the same thing can be said about Starbucks (NASDAQ: SBUX  ) , and it, too, disappointed investors last week.

"Holiday 2013 was the first in which many traditional brick and mortar retailers experienced in-store foot traffic give way to online shopping in a major way," CEO Howard Schultz observed, though he did go on to say that his coffee chain's "unique combination of physical and digital assets" helped it grow in this climate. 

However, Schultz is right about folks no longer heading to stores the way that they used to. This is something that will naturally impact nearby eateries. Chipotle and Starbucks are holding up better, and that's something that may be at least partly explained by their popularity with workers. Starbucks is a staple of the morning commute, and Chipotle is at its business during the corporate world's lunch hour. In an improving economy, Starbucks and Chipotle should be rocking, but we are once again reminded that Starbucks posted modest growth but not enough to excite the market.

Chipotle has also been mortal lately. The chain of more than 1,550 eateries routinely blasted through Wall Street's profit targets with ease during its first several years as a public company, but it fell short last quarter. It has come up short in half of the past four periods. 

We'll find out soon enough if chilly December temperatures or the malady that stung many concepts during the holiday quarter held Chipotle back. Given the stock's lofty valuation -- trading at a rich 38 times this new year's profit target -- it can't afford to be as imperfect as the retail food operators that have already reported this season.

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