Shares of Chipotle Mexican Grill (CMG) and Texas Roadhouse (TXRH) have been tumbling like greedy children off a too-sweet slide, leaving investors to wonder if these fallen candies are worth picking up. Chipotle’s stock has melted this year-down 35%-while Texas Roadhouse’s has dribbled away 5% year to date. Yet both companies continue to build new restaurants as if they’re stacking gingerbread houses, and their names remain etched in the minds of loyal customers like chocolate sauce on a spoon.
But which stock offers the better growth profile at today’s prices? Let us peer through the sugar-coated window of the market and see.
The Burrito Bandit’s Bumpy Ride
Chipotle’s second quarter was a tale of woe wrapped in a tortilla. Revenue jingled into the registers like coins from a greedy piggy bank-$3.1 billion, up 3%-but the number of little hands reaching for burritos dipped like a deflated balloon. Transactions fell 5%, and even the average check (the price of each greedy bite) couldn’t fully save the day. Restaurant-level operating margin slipped to 27.4%, and earnings per share ticked down like a clock counting backward.
But fear not! Management opened 61 new restaurants, 47 of which feature the magical “Chipotlane”-a drive-thru wonder that promises to summon more customers and fatter margins. They’ve even vowed to build 315 to 345 new ones by 2025, all with these enchanted lanes. On the outlook, CEO Scott Boatwright (whose bald head gleamed like a polished pickle jar) guided to “flat” comparable sales for the year, blaming “ongoing volatility in our trends in the consumer environment.” A cheerful optimist, he is, the kind that makes you want to hide your candy. Yet he hinted at summer marketing spells and menu magic that might yet charm the customers back.
Even after this year’s meltdown, Chipotle’s stock still trades at a price-to-earnings multiple of 35-like paying for 35 gummy bears to get one lollipop. Management did sprinkle some sugar on the situation by adding $500 million to their buyback pot, but a premium price paired with flat sales is like buying a lemon for a dollar when the grocer sells them for a dime.
The Steakhouse with a Silver Spoon
Texas Roadhouse, on the other paw, served up a more delectable second quarter. Revenue rose 12.7% to $1.5 billion, comparable sales at company restaurants climbed 5.8%, and earnings per share grew to $1.86. Yes, beef and labor costs gnawed at their margins, but the restaurant still managed to stuff more dollars into the till.
What’s more, the company’s three brands-Texas Roadhouse, Bubba’s 33, and Jaggers-are all drawing customers like moths to a flame. “Our operators delivered another quarter of strong comparable restaurant sales growth driven by positive traffic,” declared CEO Jerry Morgan, whose voice could charm the crumbs out of a cookie jar. He did warn, however, that the Great Bear of Beef Inflation would continue to lumber through their profits like a clumsy giant.
Management also promised to grow their store-week base by 5% in 2025, a number that sounds suspiciously like the kind of promise a toffee-seller might make before melting in the sun. Unlike Chipotle, Texas Roadhouse also shares some of its candy with investors, offering a 1.7% dividend yield-like sprinkling stardust on your sweets.
The Verdict
Both companies are building castles in the sand, but Texas Roadhouse offers the more tempting treat. Its comparable sales are rising on traffic, not just price, and its unit growth is as steady as a metronome. The stock trades at a mid-20s price-to-earnings multiple-like buying a caramel apple for $25 instead of $35. That’s a discount when one business (Texas Roadhouse) is growing guest counts while the other (Chipotle) is guiding for flat sales.
Of course, the Great Bear of Beef Inflation still looms, and if the economy turns sour, customers might swap their steak dinners for instant noodles. Chipotle, too, faces risks: transaction softness and cautious guidance could linger like bad breath after a garlic soufflé.
But in this candy shop of stocks, Texas Roadhouse tastes sweeter. Chipotle may be a shiny lollipop with a long shelf life, and that recent buyback boost is a nice cherry on top-but when one brand offers flat sales and a premium price, the scales tip toward the steakhouse. 🚀
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2025-09-18 14:18