On Tuesday afternoon, Chipotle Mexican Grill (CMG -1.11%) reported stellar profit growth for the second quarter of 2022. Adjusted earnings per share (EPS) surged 25% year over year, reaching a new record high.

So far, high inflation doesn't appear to be hurting Chipotle's business at all. Nevertheless, investors may want to wait for confirmation that the fast-casual restaurant pioneer's price increases aren't alienating customers before jumping into Chipotle stock.

Another good quarter

Chipotle reported a 10.1% comparable sales increase for the second quarter: toward the lower end of the 10% to 12% guidance range it had provided in April. That still allowed it to post healthy top-line growth of 17%, driving revenue to a record $2.2 billion.

Meanwhile, menu price increases helped Chipotle offset rising costs, enabling the company to expand its restaurant-level operating margin to 25.2% from 24.5% in Q2 2021. Chipotle's overall operating margin expanded even more, as revenue grew faster than overhead costs.

As a result, adjusted EPS jumped to $9.30 from $7.47 a year earlier, comfortably beating the analyst consensus. Investors were thrilled: Chipotle stock spiked 15% on Wednesday.

Revenue growth has slowed

During the company's recent earnings call, Chipotle executives said that as of mid-May, comp sales growth was on track to reach the upper end of the chain's 10% to 12% guidance range. Instead, growth slowed in the second half of the quarter.

CFO Jack Hartung attributed the slowdown to three factors: macroeconomic pressures, throughput issues related to staff turnover, and a return to normal seasonality for Chipotle restaurants in college towns.

The latter two issues seem relatively harmless. Chipotle is stepping up its training efforts to improve productivity and throughput, which should reduce wait times and enable higher sales. Meanwhile, as students return to college campuses later this summer, sales growth in college-town restaurants should pick up again.

However, the impact of inflation on consumers' wallets could be a thornier problem. While Chipotle's customers tend to have relatively high incomes, the chain is clearly starting to see some pressure on visit frequency. Comp sales growth has slowed to the mid-single digits this month.

Planning a risky price increase

Despite these trends, Chipotle plans to increase menu prices by an average of 4% next month -- on top of similar increases implemented in March 2022 and December 2021. Notably, effective pricing was already up about 10% year over year in the third quarter of 2021. That means Chipotle will have increased prices by about 23% in the span of two years.

The interior of a Chipotle restaurant.

Image source: Chipotle Mexican Grill.

On the one hand, Chipotle faces rising costs because of widespread inflation. It needs to pass those cost increases through to customers to continue expanding its profit margin.

On the other hand, raising prices when customer traffic is already slowing is a dangerous move. As high costs for everyday essentials burn through consumers' excess savings from 2020 and 2021, customer traffic trends could sag further, especially with Chipotle's prices moving higher again.

Too pricey relative to risk

I'm relatively optimistic about Chipotle's long-term growth prospects. However, management may be getting too greedy with respect to pricing.

If the chain doesn't experience much price resistance from customers, the upcoming price increase could help Chipotle continue posting strong earnings growth in the quarters ahead. However, there's also a meaningful risk that Chipotle alienates some customers by raising prices yet again. If it does, there's no telling how long it could take for the company to regain its growth momentum.

At its current valuation of 47 times its projected 2022 earnings, Chipotle stock looks too expensive to be a good bet without more clarity on whether customers are willing to accept yet another price increase.