Shares of Chipotle Mexican Grill (CMG 3.87%) were once doing a great job at satisfying its investors' big appetites. They were up an impressive 368% in the five-year period leading up to their peak in June 2024. Today, they trade 41% below that high-water mark. Market sentiment has shifted.
Is this Tex-Mex restaurant chain a growth stock to buy right now or a wait-and-see story?
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Chipotle's foot traffic has taken a hit
For several years, Chipotle's financial results resembled those of a quickly expanding tech enterprise more than the retail-based business that it is. Throughout the pandemic and periods of soaring inflation and rising interest rates, the business was performing very well. However, 2025 introduced a speed bump that no one saw coming.
Despite the economy appearing to be in solid shape, consumer confidence in the U.S. is near the lowest levels in decades. Households are more particular about their spending. This includes eating out.
And Chipotle is feeling the pain. Same-store sales declined in the first and second quarters last year. In the third quarter, they returned to positive growth of 0.3%. In 2023 and 2024, these metrics were up 7.9% and 7.4%, respectively, so the long-term trend is promising.
That doesn't take away from the leadership team's commentary about how lower-income households are eating out less. But CEO Scott Boatwright believes this problem is not specific to Chipotle. "This group is facing several headwinds, including unemployment, increased student loan repayment, and slower real wage growth," he said on the Q3 2025 earnings call.
Profitability has also weakened. Chipotle's Q3 operating margin of 15.9% was down from 16.9% in the year-before period. Tariffs and rising beef costs are contributing to inflationary pressures.
NYSE: CMG
Key Data Points
Investors should take the long view with Chipotle
Despite its recent slowdown, I view Chipotle as a smart stock to buy now. It has the brand recognition in an extremely competitive industry, pioneering the fast-casual concept and still providing an exceptional value proposition relative to peers. With 3,916 company-owned stores in its footprint, it certainly has scale advantages. This helps when finding favorable real estate or investing in tech capabilities and marketing initiatives.
And perhaps most importantly, Chipotle is not even close to being done growing. It plans to open 350 to 370 net new stores in 2026, a pace that has been accelerating. And management hopes to one day have 7,000 locations open in the U.S. and Canada.
The economy ebbs and flows. And no business is immune. Chipotle's revenue and earnings, however, are set to be much higher five or 10 years from now. This will propel the stock price.
