Over the past six months, Chipotle’s shares (currently trading at $48.67) have posted a disappointing 17.7% loss while the S&P 500 was down 8.3%. This was partly driven by its softer quarterly results and may have investors wondering how to approach the situation.

Following the drawdown, is this a buying opportunity for CMG? Find out in our full research report, it’s free.

Why Is Chipotle a Good Business?

Born from a desire to offer quick meals with fresh, flavorful ingredients, Chipotle (NYSE:CMG) is a fast-food chain known for its healthy, Mexican-inspired cuisine and customizable dishes.

1. New Restaurants Opening at Breakneck Speed

The number of dining locations a restaurant chain operates is a critical driver of how quickly company-level sales can grow.

Chipotle operated 3,726 locations in the latest quarter. It has opened new restaurants at a rapid clip over the last two years, averaging 7.8% annual growth, much faster than the broader restaurant sector.

When a chain opens new restaurants, it usually means it’s investing for growth because there’s healthy demand for its meals and there are markets where its concepts have few or no locations.

2. Surging Same-Store Sales Show Increasing Demand

Same-store sales is an industry measure of whether revenue is growing at existing restaurants, and it is driven by customer visits (often called traffic) and the average spending per customer (ticket).

Chipotle has been one of the most successful restaurant chains over the last two years thanks to skyrocketing demand within its existing dining locations. On average, the company has posted exceptional year-on-year same-store sales growth of 7.7%.

3. Economies of Scale Give It Negotiating Leverage with Suppliers

With $11.31 billion in revenue over the past 12 months, Chipotle is one of the most widely recognized restaurant chains and benefits from customer loyalty, a luxury many don’t have. Its scale also gives it negotiating leverage with suppliers, enabling it to source its ingredients at a lower cost.

Final Judgment

These are just a few reasons why Chipotle is one of the best restaurant companies out there. After the recent drawdown, the stock trades at 37.1× forward price-to-earnings (or $48.67 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More Than Chipotle

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.