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Chipotle Mexican Grill (NYSE: CMG) He reported the financial results of the first quarter on Wednesday, publishing a tight benefit of $ 0.29, which exceeded Wall Street estimates. However, their $ 2.9 billion income involved expectations.
This top Stock Restaurant He has been a great winner for the past five years (April 24), increasing 184%. But investors are losing their appetite for this by 2025. Shares have closed 18% so far this year and have dropped by 28% compared to the maximum that they settled in June 2024.
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Has this descent established Chipotle as a stock that you should now buy at the dive and keep it for the next 20 years?
North -American consumers are not in the best way these days. Reading the Consumer Feeling Index of the University of Michigan this month was the second lowest registration (the data dates back to 1952). The only one again was worse was in June 2022, just after the Federal Reserve began to increase the reference rates of interest to combat increasing inflation.
The United States could not be officially in a recession right now. But the general mood of consumers is far from pink, as they try to reduce their discretionary spending to prepare for more difficult times. This is affecting Chipotle, a business that had previously enjoyed quite lasting demand.
Tex-Mex’s fast pioneer reported a surprising Sales from the same store decrease of 0.4% in the first quarter. This was its first year-on-year fall since the second quarter of 2020, the appearance of the Covid-19 pandemic. And it was a drastic reversal of the 7% gain that was recorded in the first quarter of 2024.
“In February, we began to see that the high level of uncertainty that consumers began to affect their spending habits,” said CEO Scott Boatwright on this week’s earnings call. The company’s prospects require sales from the same store to increase in the low digit rank for the whole year.
According to his credit, Chipotle has long implemented a strategy that focuses on his value proposition for customers. The management still believes that this is the key force of the company, highlighting the average cost of less than $ 10 of its chicken burritos and Burrito bowls, its most popular dishes.
“It is approximately 20% to 30% below the casual comparable meals and can reach up to 50% below the comparable meals in some markets,” Boatwright said about these menu items. This, at least, can provide a buffer that will allow Chipotle to go better than rivals in a recessal scenario.
