During his time as CEO of Berkshire Hathaway, Warren Buffett directed capital allocation moves that propelled a 20% compound annual return. The Oracle of Omaha's success at managing the public equities portfolio was a big factor. Average investors should be looking at these holdings to find new ideas.
Buffett is familiar with the restaurant sector, as Berkshire previously owned Restaurant Brands International. However, he never took a stake in Chipotle Mexican Grill (CMG 3.87%), a booming chain within the fast casual category. Here are three reasons why Buffett would've loved this Tex-Mex restaurant stock.
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Warren Buffett appreciates economic moats
Chipotle has built up an economic moat in the competitive restaurant industry. Its brand is highly regarded after pioneering the fast casual concept to national recognition in the U.S. The fact that Chipotle reached 40 million rewards members in mid-2024, about five years after launching the loyalty program in early 2019, shows how popular its food is.
Moreover, despite management guiding for a same-store sales (SSS) decline in 2025, due to consumer weakness in the U.S., Chipotle has an impressive track record of SSS growth over a longer period of time.
Apple, Coca-Cola, and American Express are clear examples of powerful brand names in Berkshire's portfolio.
Taking care of its customers
While critics might say this is no longer true, Chipotle became so successful because it offered a fantastic customer value proposition. Food made with fresh ingredients at an attractive price point helped it pick up demand from people who wanted to move up from fast food chains.
Management has proven that it continues to take care of customers. Menu innovations, like the recent protein cups and red chimichurri, keep things exciting and cater to changing preferences.
In recent years, Chipotle has been building many new stores with drive-thrus. This boosts high-margin digital sales. It also increases accessibility and convenience for customers.
"Our value proposition has never been stronger," CEO Scott Boatwright said on the third-quarter 2025 earnings call.
NYSE: CMG
Key Data Points
Strong financial position
Chipotle is a scaled operator, which supports its financial position. The business ended Q3 (on Sept. 30, 2025) with 3,916 company-owned stores, helping it bring in $3 billion in revenue during the quarter. This allows Chipotle to invest in areas like marketing and technology, costs that can be spread over a bigger physical footprint and sales base.
Chipotle's restaurant-level operating margin typically comes in well above 20%. In the past five years, the company's quarterly net income margin averaged a robust 15.3%. Aside from about $5 billion in operating lease liabilities, a normal balance sheet item for retail-based operations, Chipotle also carries no debt.
Given that Chipotle fits many of the criteria Buffett looked for, it might deserve some attention from investors.
