Chipotle Mexican Grill (CMG +1.29%) has been a core holding for Bill Ackman since Pershing Square first disclosed a nearly 10% stake in 2016, and the investment has paid off handsomely over the long run. More recently, Ackman has spotlighted Uber -- another top Pershing position -- which has delivered a standout year in 2025 as the ride-hailing leader's growth and cash generation accelerated.
While Uber has succeeded this year, Chipotle has struggled. Shares have fallen well below last year's highs, prompting investors to revisit the long-term case. Is this a good time to buy into one of Ackman's major holdings?
The fast-casual restaurant operator is known for a tight menu, strong unit economics, and a growing digital business. But results this year show the impact of softer U.S. traffic and a tougher consumer backdrop. The key question now is whether the valuation has reset enough to make the stock attractive.
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Disappointing restaurant performance
Chipotle's recent business slump continued into the second quarter. Revenue rose just 3% to about $3.1 billion, driven primarily by new restaurants, while comparable sales declined 4% as transactions fell 4.9% and average check ticked up 0.9%. Non-GAAP (generally accepted accounting principles) earnings per share slipped roughly 3% year over year.
Looking ahead, results will likely remain weak in the near term. Management guided to roughly flat comparable sales for the full year. However, the company does expect growth to come from new store openings, as it plans for 315 to 345 openings, with more than 80% expected to include a Chipotlane. And there's reason for at least some optimism. Chipotle CEO Scott Boatwright said in the second-quarter earnings release that momentum was building as summer promotions drove positive comps and transactions in June.
The first quarter told a similar (but slightly better) story than Q2: Revenue grew 6.4% to $2.9 billion, but comps dipped 0.4%, and restaurant-level margin contracted to 26.2%. That sequentially weaker comp trend from the first to the second quarter helps explain the market's skepticism this summer.
Even so, Chipotle is not standing still. Earlier this month, the company added another $500 million to its repurchase authorization, lifting remaining capacity to about $750 million as of mid-September. Through the first half of 2025, Chipotle had already spent roughly $1 billion repurchasing shares, buying back around $436 million in the second quarter alone. Management said the incremental authorization allows it to "opportunistically repurchase shares" at current prices.
NYSE: CMG
Key Data Points
Has the stock fallen far enough?
After a sizable sell-off this year, Chipotle trades at around a mid-30s price-to-earnings multiple on trailing-12-month earnings -- far below last year's stretched levels but still a premium to many restaurant peers.
On one hand, Chipotle's core economics remain appealing: strong brand recognition, disciplined new-unit rollout, and a high mix of digital orders that support throughput and loyalty. The company is also pushing into new geographies. It plans to open in Mexico via a development agreement and is preparing for a 2026 entry into Asia through a joint venture in South Korea and Singapore -- a measured international push that could extend its runway.
On the other hand, a flat-to-negative comp environment can weigh on margins, and a premium stock still needs improving traffic and attractive new-restaurant returns in its core markets to work from here. Investors should also factor in broader consumer sensitivity and protein cost inflation, which management called out in its latest release.
All in all, Chipotle looks more interesting after the drawdown, but the case hinges on evidence that comps stabilize, margins hold near the high 20s at the restaurant level, and new-unit growth continues at a healthy clip. The company has catalysts: menu innovation, loyalty, Chipotlanes, and an early international expansion. But with shares still valued at a premium and comps under pressure this year, investors may want to scale in rather than rush.
