Chipotle Mexican Grill Stock Actually Gained 6% in the Second Half of 2022. Is the Worst Over?

What happened

Shares of restaurant chain Chipotle Mexican Grill (CMG -1.34%) gained 6% in the second half of 2022, according to data provided by S&P Global Market Intelligence. Chipotle has been demonstrating resilience in the face of a tough economy and has tons of opportunity ahead.

So what

Chipotle Mexican Grill has weathered the pandemic with little negative impact but has seen enormous growth in its digital orders. It's now emerging with consistent double-digit sales growth and doubling down on its efforts to increase store count.

In the 2022 third quarter, the trend continued with a 13.7% increase in net sales. Chipotle also opened 43 restaurants in the quarter, including 38 that were built with Chipotlanes, the company's name for its drive-thrus. This has been an important development because many chain restaurants have evolved from in-store dining experiences to digital orders and deliveries. Having the Chipotlane increases store efficiency and drives profits.

Opening new stores remains a high priority, but stores are also posting robust comparable sales (comps). Comps rose 7.6% in the third quarter and are a strong growth driver.

Chipotle has been managing inflation effectively as well. Many costs have been increasing, which the company has countered with price increases. That led to higher revenue in the third quarter, as well as costs going down as a percentage of revenue despite the increases. Earnings per share rose from $7.18 last year to $9.20 this year in the third quarter.

CEO Jon Nicoll pointed out that as a fast-casual chain, in contrast with lower-price fast-food chains, Chipotle targets a higher-income population that can better manage price increases.

Now what

Chipotle stock is still down almost 9% over the past year, but this second-half rise is an excellent show of investor confidence, and there's no reason not to be confident about Chipotle Mexican Grill's opportunities.

The company currently operates 3,100 locations and plans to open 255 to 285 new restaurants in 2023. It has long-term plans to reach 7,000 restaurants, a number it raised from 6,000 just last year. That includes global locations. It only operates 50 international locations as of the end of the third quarter, and there's real potential for thousands more. 

Considering its well-run operations and long runway ahead, investors can still expect gains from Chipotle Mexican Grill stock.