When Brian Niccol left Chipotle Mexican Grill (CMG -3.38%) to run Starbucks (SBUX -0.57%), the two stocks became intertwined to see which one would outperform. Thus far in 2026, Starbucks stock has been the clear winner. However, after both restaurant operators reported better-than-expected results this past quarter, it was Chipotle's shares that were soaring higher.
When it comes to valuation, neither Starbucks nor Chipotle are exactly in the bargain bin. The former trades at a forward price-to-earnings ratio (P/E) of around 35.5 times estimates for fiscal 2027 (ending September 2027), while the latter trades at 28.5 times the 2027 consensus. That means that the stock which outperforms is largely going to come down to execution, and this gives Starbucks the edge.
Improving same-store sales
Both restaurant operators produced same-store sales (comps) last quarter that came in above analyst expectations. Chipotle saw its comps rise 2.2%, with a 1% gain in traffic and a 1.2% increase in check size. That was above the 1.3% consensus, based on Bloomberg data, as management credited menu innovations, like honey chicken and its cilantro lime sauce, together with marketing and its loyalty program for its results.
NYSE: CMG
Key Data Points
The chain also raised its full-year comps guidance and now expects them to rise in the low single digits despite the cyclospora outbreak that has affected restaurant industry sales. It previously was expecting flat comps.
Starbucks, meanwhile, saw a surge in its comps, helped by menu improvements, cafe remodels, and marketing. Global comps climbed 7.9%, with a 4.2% jump in traffic and a 3.5% increase in average ticket.
Analysts were looking for global comps to increase by 5.7%. North American comps were a bit stronger, with an 8.1% increase, while the international increase was a strong 5.7%. The coffee shop operator also raised its comps guidance for the year, taking it to 6% from a prior outlook of 5%, with an expected 6.5% rise for the fiscal fourth quarter.
NASDAQ: SBUX
Key Data Points
While the two restaurant operators showed nice improvements in same-store sales, one area where they diverged was with operating margins. When Niccol took over as Starbucks CEO, the much easier part of the job was helping improve sales.
Its former CEO had cut back on staff to boost profits, along the way agitating customers, and eventually causing the more-casual Starbucks' consumer to stay away. While fixing this was right up Niccol's alley, the more difficult thing for him would be lifting sales while not destroying the company's operating margins.
Now, as Starbucks has added staff, its operating margin has collapsed. For example, its 2024 fiscal third-quarter North American operating margin was 21%, while it fell to 13.3% in fiscal 2025.
This past quarter, the company slowly started building it back up, with its North American operating margin expanding 30 basis points year over year to 13.6%. International operating margins surged 550 basis points to 19.1%, aided by the company's transition of its Chinese stores to a licensed joint-venture model. Starbucks still has a long way to go to recapture its past operating margins, but it is now headed in the right direction.
Chipotle, on the other hand, saw its operating margin fall from 18.2% to 15.7%, while its restaurant-level margin dropped from 27.4% to 25.2%. Inflation in commodities and wages were largely responsible, as the company earlier decided not to fully pass inflation costs on to consumers while it was struggling with sales.
Image source: The Motley Fool.
Why Starbuck is the better stock
In my view, I think Starbucks is the better stock to own because Niccol has done a great job of driving sales, and the stock will have plenty of upside if he can continue to recapture the company's lost margins. Management has done a great job with menu innovation to bring in traffic, and I think the company should be able to gradually leverage that into stronger operating margins.
Meanwhile, I think Chipotle is doing a nice job of navigating overall industry headwinds, but I think it may be missing some of the past Niccol magic.
