Chipotle: In A Bind As Comp Sales Decelerate And Margins Recede

Gary Alexander
31.02K Followers
(8min)

Summary

  • Chipotle's Q4 results showed a continued deceleration in comparable sales trends, with the company pointing to a volatile start in Q1 as well.
  • Competition from fast-casual peers like CAVA and Sweetgreen, along with challenging macro conditions, pose significant risks to Chipotle's growth and market share.
  • At the same time, recent price increases have been insufficient to offset food inflation, and Chipotle's margins have declined.
  • Still trading at a ~40x forward P/E ratio, Chipotle's justifications for a premium multiple are wearing thin, which could spark further correction.

Chipotle logo in front of their restaurant in Toronto, Ontario. Chipotle is an American fast food brand specialized in grill & Mexican food

BalkansCat

Over the past few years, inflation has touched nearly every aspect and purchase in our daily lives, but perhaps one of the most visible areas is on restaurant menus. Consumers have battled high single digit to double-digit inflation on restaurant prices, which

This article was written by

31.02K Followers
With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

About CMG Stock

SymbolLast Price% Chg
Market Cap
PE
Yield
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on CMG

Related Stocks

SymbolLast Price% Chg
CMG
--
CMGS:CA
--