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CMG Stock Slips 18% in a Month: Should You Act Now or Hold Steady?
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Key Takeaways
Chipotle stock fell 17.6% in a month, underperforming both its industry peers and the S&P 500.
Weak Q2 results, flat 2025 comp sales outlook and rising costs are pressuring CMG's performance.
Expansion, digital growth and loyalty initiatives remain key drivers of Chipotle's long-term story.
Shares of Chipotle Mexican Grill, Inc. (CMG - Free Report) have declined 17.6% in the past month compared with the Zacks Retail - Restaurants industry’s 1.6% drop. Over the same timeframe, the stock has underperformed the S&P 500’s growth of 1.9%.
Investor sentiment surrounding Chipotle has been weighed down by a soft second-quarter performance, weaker comparable sales and concerns over consumer trade-down trends.
CMG One-Month Price Performance
Image Source: Zacks Investment Research
From a technical perspective, CMG stock is currently trading below its 50-day moving average, signaling a bearish trend.
CMG Stock Trades Below 50-Day Moving Average
Image Source: Zacks Investment Research
While the company remains fundamentally strong with a long growth runway, near-term margin pressures and cautious guidance have raised doubts about whether now is the right time to buy CMG stock. Let us take a closer look.
What’s Pressuring CMG Stock?
Investor sentiment around Chipotle has been rattled by a confluence of macroeconomic headwinds, shifting consumer behavior and intensifying competition in the fast-casual dining sector. Management described the second quarter as facing one of the most difficult operating backdrops in recent history, with pressures from extraordinary year-over-year comparisons, softening confidence among low-income consumers and increased sensitivity to price. This dynamic contributed to a 4% decline in comparable sales.
Although traffic trends improved in June and July following intensified marketing efforts and promotional activity, management acknowledged that macro headwinds — such as promotional activity across the QSR industry and consumers trading down — remain persistent. These factors have not only impacted short-term traffic but also necessitated a reevaluation of Chipotle’s value communication strategy. For 2025, management anticipates comparable sales to remain roughly flat, down from the earlier projection of low-single-digit growth.
Rising input costs have further weighed on CMG’s profitability. The company expects its cost of sales to rise to the high-29% range in the third quarter of 2025. This increase reflects a 60-basis point impact from the conclusion of its Chipotle Honey Chicken limited-time offering (LTO) and an additional 40 basis points due to tariffs. Tariff-related headwinds are projected to contribute a consistent 50-basis point drag going forward, in line with previous estimates and excluding goods covered under the USMCA exemption for Mexican and Canadian imports. The company anticipates core commodity inflation to remain in the low single-digit range through the rest of the year, excluding the effects of LTOs, tariffs and cost efficiency gains.
Competition is complicating the picture. Management noted that lower-income consumers are increasingly seeking value at lower price points, such as bundled meal deals offered by quick-service rivals. Although Chipotle emphasized that its entrées are priced at a 20%-30% discount to comparable fast-casual meals, executives admitted the brand is not currently getting full credit from consumers for that value proposition. This disconnect has made it harder to drive consistent transaction growth, particularly among lower-frequency customers.
Can Chipotle Overcome the Headwinds?
Despite the recent sell-off, Chipotle remains fundamentally strong, with several levers to drive long-term growth. Management has emphasized that comps turned positive in June and early July, helped by the rollout of targeted marketing campaigns and new menu innovations. Programs like the “Summer of Extras” rewards initiative attracted millions of participants, while limited-time items such as Chipotle Honey Chicken and Adobo Ranch boosted transaction volumes and customer engagement.
Expansion remains a key growth engine. Chipotle opened 61 new restaurants in the second quarter of 2025, with the majority featuring its popular Chipotlane format. International markets are also showing promise: Canada has nearly tripled sales in five years, Europe is seeing improved economics, and Middle East locations are outperforming U.S. averages. With plans to open 315 to 345 restaurants in North America this year and a long-term target of 7,000 units, Chipotle is laying the foundation for sustained growth. Management remains confident these operational, digital and expansion initiatives will support a return to mid-single-digit comparable sales growth and help push average unit volumes beyond $4 million.
On the digital front, Chipotle continues to enhance its app and loyalty ecosystem to boost engagement. Recent updates allow for more personalized rewards, reminders and menu suggestions, and about 20 million members have been active or made a transaction in the past year. The company has also leaned into gamification with its “Summer of Extras” program, which offered bonus points, badges and prizes to loyalty members. The promotion significantly lifted participation, spending and visit frequency, and management plans to build on this momentum with a college-focused loyalty campaign this fall.
The company is also preparing to test a catering platform this fall, an area that currently accounts for 1-2% of sales compared with 5-10% for peers, suggesting a sizable runway for incremental revenues. These factors provide investors with reason to remain optimistic about CMG’s ability to regain momentum over the longer term.
CMG Stock Valuation Insights
Over the past 60 days, the Zacks Consensus Estimate for Chipotle’s fiscal 2025 earnings per share (EPS) has remained unchanged at $1.21. Over the same time frame, estimates for industry players, including Brinker International, Inc. (EAT - Free Report) , McDonald's Corporation (MCD - Free Report) and The Cheesecake Factory Incorporated (CAKE - Free Report) , have increased 5.4%, 0.7% and 2.7%, respectively.
CMG Earnings Estimate Trend
Image Source: Zacks Investment Research
Chipotle stock is currently trading at a premium. CMG is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 32.17, well above the industry average of 25.01, reflecting an attractive investment opportunity. Other industry players, such as Brinker, McDonald's and Cheesecake Factory, have P/E ratios of 15, 23.96 and 15.43, respectively.
Image Source: Zacks Investment Research
Our Thoughts on CMG Stock
Chipotle’s long-term growth story remains intact, supported by aggressive unit expansion, international momentum, and ongoing investments in digital engagement and operational efficiency. However, near-term headwinds from flat comparable sales guidance, tariff-driven cost pressures and heightened competition in the value-driven QSR space warrant caution. At a premium valuation, much of the optimism around its future growth is already reflected in the stock.
Key factors to watch include Chipotle’s ability to strengthen its value perception, sustain traffic gains from loyalty programs and offset inflationary pressures on margins. We recommend waiting for greater clarity on comparable sales recovery before adding new positions. For existing shareholders, maintaining exposure may be sensible, given Chipotle’s long runway and proven execution, but near-term volatility is likely to persist.
Image: Bigstock
CMG Stock Slips 18% in a Month: Should You Act Now or Hold Steady?
Key Takeaways
Shares of Chipotle Mexican Grill, Inc. (CMG - Free Report) have declined 17.6% in the past month compared with the Zacks Retail - Restaurants industry’s 1.6% drop. Over the same timeframe, the stock has underperformed the S&P 500’s growth of 1.9%.
Investor sentiment surrounding Chipotle has been weighed down by a soft second-quarter performance, weaker comparable sales and concerns over consumer trade-down trends.
CMG One-Month Price Performance
Image Source: Zacks Investment Research
From a technical perspective, CMG stock is currently trading below its 50-day moving average, signaling a bearish trend.
CMG Stock Trades Below 50-Day Moving Average
Image Source: Zacks Investment Research
While the company remains fundamentally strong with a long growth runway, near-term margin pressures and cautious guidance have raised doubts about whether now is the right time to buy CMG stock. Let us take a closer look.
What’s Pressuring CMG Stock?
Investor sentiment around Chipotle has been rattled by a confluence of macroeconomic headwinds, shifting consumer behavior and intensifying competition in the fast-casual dining sector. Management described the second quarter as facing one of the most difficult operating backdrops in recent history, with pressures from extraordinary year-over-year comparisons, softening confidence among low-income consumers and increased sensitivity to price. This dynamic contributed to a 4% decline in comparable sales.
Although traffic trends improved in June and July following intensified marketing efforts and promotional activity, management acknowledged that macro headwinds — such as promotional activity across the QSR industry and consumers trading down — remain persistent. These factors have not only impacted short-term traffic but also necessitated a reevaluation of Chipotle’s value communication strategy. For 2025, management anticipates comparable sales to remain roughly flat, down from the earlier projection of low-single-digit growth.
Rising input costs have further weighed on CMG’s profitability. The company expects its cost of sales to rise to the high-29% range in the third quarter of 2025. This increase reflects a 60-basis point impact from the conclusion of its Chipotle Honey Chicken limited-time offering (LTO) and an additional 40 basis points due to tariffs. Tariff-related headwinds are projected to contribute a consistent 50-basis point drag going forward, in line with previous estimates and excluding goods covered under the USMCA exemption for Mexican and Canadian imports. The company anticipates core commodity inflation to remain in the low single-digit range through the rest of the year, excluding the effects of LTOs, tariffs and cost efficiency gains.
Competition is complicating the picture. Management noted that lower-income consumers are increasingly seeking value at lower price points, such as bundled meal deals offered by quick-service rivals. Although Chipotle emphasized that its entrées are priced at a 20%-30% discount to comparable fast-casual meals, executives admitted the brand is not currently getting full credit from consumers for that value proposition. This disconnect has made it harder to drive consistent transaction growth, particularly among lower-frequency customers.
Can Chipotle Overcome the Headwinds?
Despite the recent sell-off, Chipotle remains fundamentally strong, with several levers to drive long-term growth. Management has emphasized that comps turned positive in June and early July, helped by the rollout of targeted marketing campaigns and new menu innovations. Programs like the “Summer of Extras” rewards initiative attracted millions of participants, while limited-time items such as Chipotle Honey Chicken and Adobo Ranch boosted transaction volumes and customer engagement.
Expansion remains a key growth engine. Chipotle opened 61 new restaurants in the second quarter of 2025, with the majority featuring its popular Chipotlane format. International markets are also showing promise: Canada has nearly tripled sales in five years, Europe is seeing improved economics, and Middle East locations are outperforming U.S. averages. With plans to open 315 to 345 restaurants in North America this year and a long-term target of 7,000 units, Chipotle is laying the foundation for sustained growth. Management remains confident these operational, digital and expansion initiatives will support a return to mid-single-digit comparable sales growth and help push average unit volumes beyond $4 million.
On the digital front, Chipotle continues to enhance its app and loyalty ecosystem to boost engagement. Recent updates allow for more personalized rewards, reminders and menu suggestions, and about 20 million members have been active or made a transaction in the past year. The company has also leaned into gamification with its “Summer of Extras” program, which offered bonus points, badges and prizes to loyalty members. The promotion significantly lifted participation, spending and visit frequency, and management plans to build on this momentum with a college-focused loyalty campaign this fall.
The company is also preparing to test a catering platform this fall, an area that currently accounts for 1-2% of sales compared with 5-10% for peers, suggesting a sizable runway for incremental revenues. These factors provide investors with reason to remain optimistic about CMG’s ability to regain momentum over the longer term.
CMG Stock Valuation Insights
Over the past 60 days, the Zacks Consensus Estimate for Chipotle’s fiscal 2025 earnings per share (EPS) has remained unchanged at $1.21. Over the same time frame, estimates for industry players, including Brinker International, Inc. (EAT - Free Report) , McDonald's Corporation (MCD - Free Report) and The Cheesecake Factory Incorporated (CAKE - Free Report) , have increased 5.4%, 0.7% and 2.7%, respectively.
CMG Earnings Estimate Trend
Image Source: Zacks Investment Research
Chipotle stock is currently trading at a premium. CMG is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 32.17, well above the industry average of 25.01, reflecting an attractive investment opportunity. Other industry players, such as Brinker, McDonald's and Cheesecake Factory, have P/E ratios of 15, 23.96 and 15.43, respectively.
Image Source: Zacks Investment Research
Our Thoughts on CMG Stock
Chipotle’s long-term growth story remains intact, supported by aggressive unit expansion, international momentum, and ongoing investments in digital engagement and operational efficiency. However, near-term headwinds from flat comparable sales guidance, tariff-driven cost pressures and heightened competition in the value-driven QSR space warrant caution. At a premium valuation, much of the optimism around its future growth is already reflected in the stock.
Key factors to watch include Chipotle’s ability to strengthen its value perception, sustain traffic gains from loyalty programs and offset inflationary pressures on margins. We recommend waiting for greater clarity on comparable sales recovery before adding new positions. For existing shareholders, maintaining exposure may be sensible, given Chipotle’s long runway and proven execution, but near-term volatility is likely to persist.
Chipotle currently carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.