Chipotle Mexican Grill (CMG +0.86%) was an incredible growth stock over the past two decades. The fast-casual restaurant chain went public at a split-adjusted price of $0.44 per share on Jan. 26, 2006, and now trades at about $41.
From 2006 to 2024, Chipotle's revenue rose from $220 million to $11.3 billion, its number of company-owned stores rose more than sixfold to 3,726 locations, and its net income surged from $41 million to $1.53 billion. It grew rapidly as it carved out a defensible niche in the fast-casual market, opened more locations, and promoted its brand through edgy marketing campaigns. It also streamlined its menu with fewer products, expanded its digital orders and sticky loyalty campaigns, and evolved into a top restaurant brand among Gen Z and Millennial customers.
Image source: Getty Images.
Yet over the past 12 months, Chipotle's stock has declined about 26% as its investors fretted over its cooling comparable sales growth, declining margins, and guidance cuts. However, I believe that pullback might actually represent a good long-term buying opportunity. Let's see why it could turn a modest $1,000 investment into a lot more money over the next few years.
NYSE: CMG
Key Data Points
What happened to Chipotle over the past year?
Nearly a year ago, I called Chipotle a solid investment because its comparable sales were rising, its restaurant-level operating margins were expanding, and it was opening more stores. I also said investors shouldn't worry about the abrupt departure of its star CEO Brian Niccol, who left the company to lead Starbucks (SBUX +1.71%) in 2024 -- since his successor, Scott Boatwright, had served as its chief operating officer throughout Niccol's entire tenure.
However, Chipotle's comparable sales stopped growing in the first half of 2025, and its restaurant-level operating margins shrank year over year. It mainly attributed the pressure to inflation, which drove up its food and labor costs, and competition. Its core market of younger diners also tightened up their spending to cope with the macro headwinds.
|
Metric |
Q3 2024 |
Q4 2024 |
Q1 2025 |
Q2 2025 |
Q3 2025 |
|---|---|---|---|---|---|
|
Comparable Sales Growth |
6% |
5.4% |
(0.4%) |
(4%) |
0.3% |
|
Restaurant Level Operating Margin |
25.5% |
24.8% |
26.2% |
27.4% |
24.5% |
|
Total Company-Owned Stores |
3,615 |
3,726 |
3,781 |
3,839 |
3,916 |
Data source: Chipotle.
On the bright side, Chipotle continued to open new stores through that slowdown, and its comparable sales grew again in the third quarter of 2025. However, it expects its comparable sales to drop by low- to mid-single digits again in the fourth quarter as it runs out of room to raise prices to counter inflation. For the full year, it expects comparable sales to decline by low single digits -- but it still aims to open 315 to 345 new stores.
What will happen to Chipotle over the next few years?
For 2026, Chipotle plans to open 350 to 370 new company-owned restaurants. Most of those locations will be equipped with drive-thru Chipotlanes to accelerate its orders. It expects inflation to continue squeezing its restaurant-level operating margins, but its comparable sales could stabilize in the second half of the year as the macro environment improves.
During its latest conference call, Boatright said Chipotle would eventually unveil a "new strategy in 2026" that will help it deliver "mid-single-digit comp growth" again. We don't know much about that turnaround strategy yet. Still, analysts expect its revenue and earnings per share (EPS) to rise 10% and 7%, respectively, in 2026 as it gradually overcomes its near-term challenges.
For 2027, they expect its revenue and EPS to grow 11% and 18%, respectively. We should take those estimates with a grain of salt, but we should recall that Chipotle previously bounced back from a much messier slowdown from 2015 to 2017. That three-year stagnation was mainly due to micro issues rather than the macro headwinds it currently faces, so it could recover much faster after inflation cools off and it executes new growth strategies.
Why could Chipotle be a excellent investment?
At $41, Chipotle might not seem cheap at 34 times this year's earnings. However, it could still have plenty of room to grow over the next few years it opens hundreds of new stores, enters new overseas markets, and upgrades its digital platform and loyalty program. If you believe Chipotle will break out of its rut -- as it did nine years ago under Brian Niccol's leadership -- then it's still a great time to accumulate more shares as the bulls look the other way.
