Shares of Chipotle Mexican Grill (CMG 3.15%) currently trade about 46% below their peak from June 2024. The market has been worried about same-store sales coming under pressure, with this key metric growing only 0.3% in the most recent quarter (Q3 2025, ended Sept. 30). Management notes that macroeconomic forces are having a negative impact.
The fast-casual restaurant chain was once a favorite among the investment community. But shares are up just 33% in the last five years, seriously underperforming the market. Perhaps the future will be better at satisfying hungry investors. Where will this restaurant stock be in five years?
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Chipotle will continue to rapidly open new locations
Growth is a key part of Chipotle's strategy, which helps it stand out in the crowded restaurant sector. The business opened its 4,000th location earlier in December. At the end of 2020, it had 2,768 restaurants. Clearly, expansion continues to drive the narrative.
The leadership team's latest guidance revealed plans to open 315 to 345 net new stores in 2025. In 2026, the goal is to open 350 to 370 net new locations. Ultimately, Chipotle sees a path to have 7,000 restaurants just in the U.S. and Canada over the long term, although an exact time frame isn't provided.
Besides further penetrating the domestic market, which is Chipotle's most important, there is opportunity in other countries. Chipotle has a strong presence in Canada, as well as restaurants in the U.K., France, and Germany. And through partnership agreements, there are three Chipotle stores in Kuwait and three in the U.A.E., with plans to open locations in Mexico, South Korea, and Singapore in 2026.
A larger store count should obviously result in much greater revenue potential in 2030 and beyond. As mentioned, same-store sales only rose 0.3% in the third quarter. However, revenue still increased by 7.5% on a year-over-year basis. Investors will want to see same-store sales return to growth mode, as the combination of more transactions and higher ticket sizes can be a powerful tailwind.
Investors want to see higher profits
As the company scales up, operating leverage certainly plays a part as Chipotle spreads its fixed costs, like rental payments and corporate salaries, over a larger revenue base. This is precisely what has occurred historically. Between Q3 2020 and Q3 2025, Chipotle's net income soared 376% to $382 million. Consequently, profit margins have improved.
It helps that Chipotle has impressive unit economics, which looks at the financial performance of each store. The average location brings in more than $3.1 million in annual sales. It also reports a notable 24.5% restaurant-level operating margin.
In the past few years, Chipotle has raised its menu prices on numerous occasions. This has generally been a worthwhile strategy that was accepted by customers, as same-store sales continued to climb higher. But in today's economic environment, consumers are constantly searching for better value.
This just means that going forward, Chipotle will need to strike the right balance between managing inflationary pressures, which are always on the top of restaurant executives' minds, and flexing its pricing power.
NYSE: CMG
Key Data Points
Patient shareholders should be rewarded
In recent years, it seems that Chipotle shares have always sold at a steep valuation. These days, however, the market is serving investors a sweet deal. Investors can buy the stock at a price-to-earnings ratio of 32.8, which is about the cheapest entry point in the trailing-five-year period. Market sentiment has gotten hammered.
Between now and the end of 2030, Chipotle shares should perform well. Of course, it depends on the business getting back on track and returning to strong fundamental gains. Wall Street consensus analyst estimates call for earnings per share to increase at a compound annual rate of 11% between 2025 and 2027.
Despite the possibility of near-term headwinds continuing, I believe Chipotle is in good shape to report these double-digit bottom-line gains throughout the rest of the decade, which can propel the stock to new heights.
