Chipotle Mexican Grill (CMG -0.60%) has been rough on shareholders in 2025. After years of near-flawless execution, the stock is down about 32% year to date as of this writing. Softer customer traffic and slowing sales growth have investors rethinking expectations. The question now is whether the selloff has reset the risk-reward enough to buy.
Chipotle is the fast-casual restaurant company behind more than 3,800 locations offering customizable burritos, bowls, tacos, and salads. Its model has long been a standout for unit economics and store-level returns. But even category leaders can hit a speed bump when consumer wallets tighten and value meals across fast food pull traffic away from pricier options. Recent results across fast casual underscore that point.
Image source: Getty Images.
Recent results show pressure
In the second quarter of 2025, revenue rose 3% to $3.1 billion as new restaurants did the heavy lifting. Comparable restaurant sales fell 4%, the company's second straight quarterly comp decline, and restaurant-level operating margin slipped to 27.4% from 28.9% a year ago. Management did note comps and transactions turned positive in June, offering a hint that trends may be stabilizing into the back half.
The quarter's slowdown was not a one-off. In the first quarter of 2025, revenue grew 6.4% while comparable sales dipped 0.4%. Sequentially, that means revenue growth decelerated and comps worsened from the first quarter to the second. That's not disastrous, but it is a change in tone for a brand accustomed to steady traffic gains.
Category context helps. Fast-casual salad specialist Sweetgreen's (SG 1.13%) second-quarter same-store sales fell 7.6% and management cut full-year guidance, while Mediterranean food chain Cava (CAVA 2.10%) managed a modest 2.1% comp increase but trimmed its outlook as traffic cooled. The broader fast-casual cohort is feeling macro pressure as consumers trade down or skip eating out altogether. Against that backdrop, Chipotle's negative 4% comp is understandable -- but it also reinforces why investors may not want to pay a premium valuation multiple for stocks in the space.
What could go right -- and why I'd wait
There are clear reasons to stay constructive. Chipotle continues to lean on a proven expansion playbook: management expects about flat full-year comps in 2025, alongside 315 to 345 new openings with more than 80% including a Chipotlane drive-thru, which tends to lift sales and returns. Longer term, the company reiterates a pathway to 7,000 restaurants across the U.S. and Canada, with international licensing as an emerging lever. As CEO Scott Boatwright put it in the company's second-quarter earnings release, "We are seeing momentum build as we rolled out our summer marketing initiatives and as our comparisons ease." In addition, he said he's optimistic the company's "positive momentum will continue" as it executes on core growth initiatives like menu innovations and improvements to its rewards program.
Still, the investment case hinges on growth living up to the stock's premium valuation. Even after the sell-off, shares recently traded at a price-to-earnings multiple of 36 -- cheaper than where the stock sat a year ago, but still a premium for a business now guiding to flat comps this year. If macro pressure lingers and value-focused competitors keep sweetening deals, recovering traffic could take time. In that scenario, a lower entry multiple would better balance the near-term risk with the company's compelling long-term store growth.
My stance: I love the brand and the unit economics, and I think the store expansion runway is a powerful growth driver. But I'd prefer to see either firmer evidence that traffic is improving beyond June or a more attractive price that builds in a slower rebound. For now, Chipotle looks like a great company whose stock still assumes a healthy growth trajectory. Waiting for either the business momentum to reaccelerate or the valuation cave further is the more investor-friendly move.
