Is Chipotle Mexican Grill a Buy, Sell, or Hold in 2025?

Core Viewpoint - Chipotle Mexican Grill has experienced a decline in stock performance over the past year, with shares down more than 12% year to date and approximately break-even over the past year, attributed to leadership changes and operational challenges [1] Buy Case - The departure of longtime CEO Brian Niccol, who was instrumental in overcoming past foodborne illness issues and driving technological innovations, has impacted stock performance, but the company retains a strong management team and continues to innovate [3][4] - Chipotle maintains strong pricing power, as evidenced by comparable-restaurant sales driven by price increases and traffic gains, which is a favorable combination for restaurant operators [5] - Recent same-store sales figures show positive growth, with Q1 2023 at 10.9%, Q2 2023 at 7.4%, and Q4 2024 projected at 5.4%, indicating potential resilience [6] - The company has some of the best restaurant level margins in the quick service industry, attributed to its efficient assembly line process and limited ingredient offerings, which enhance buying power and operational efficiency [7] - Chipotle has significant expansion opportunities, with potential to grow its restaurant base by 8% to 10% annually in the U.S. and only 85 international locations, indicating room for growth [8] Sell Case - Recent challenges include a 2% dip in comparable-restaurant sales in January due to severe weather and unfavorable calendar shifts, leading to expectations of flat sales in Q1 [9] - Restaurant level margins have faced pressure, dropping from 25.4% to 24.8% due to increased portion sizes at some locations, which were underserving customers, and potential cost pressures from tariffs [11] Verdict - Despite near-term challenges, Chipotle's long-term growth story remains intact, with ongoing customer demand and expansion potential, including the possibility of introducing breakfast options [12]