What's Wrong With Chipotle Stock?

For years, (NYSE: CMG) has been considered a bulletproof stock. After getting past its previous food health scares, the fast casual Mexican chain has steadily grown its unit count and per store sales, driving earnings higher and higher. Investors believed there was a huge runway for unit growth, both in the United States and internationally, and gave Chipotle stock a premium valuation because of it.

Chinks may finally be showing up in Chipotle's armor. Last quarter, the company reported a sharp drop in its per-restaurant sales, which inspired investors to panic sell out of the stock. Chipotle is now down 28% year-to-date (YTD), severely underperforming the market indices in 2025. Let's dive into the current problems with Chipotle and decide whether this is a short-term blip and buying opportunity or a long-term concern for investors.

Chipotle reported its latest quarterly earnings in July. Revenue grew 3% in the period to $3.1 billion, driven by more restaurant location openings. However, this was not the metric investors were focused on. What alarmed Wall Street was a 4% decline in same-store sales -- measuring year-over-year revenue growth from existing restaurants -- driven by customer traffic falling off a cliff. The company has even been implementing price increases, meaning that traffic declined even more than the 4% year-over-year comparable store sales decrease.

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Source Fool.com