Chipotle Mexican Grill (NYSE: CMG) disappointed investors when it reported first-quarter 2025 earnings. The stock is down about 25% from its 52-week high. Wingstop (NASDAQ: WING) posted weakening results, too, but it managed to do better than Chipotle. Is it a better buy with its stock around 35% below its 52-week high? Here’s what you need to know.
What does Chipotle Mexican Grill do?
Without getting into the details of the food concept, Chipotle Mexican Grill operates fast-food restaurants. The concept has proven to be very popular over the years, leading to a long period of growth. But the first quarter of 2025 wasn’t exactly an impressive performance update.
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The company’s sales rose 6.4%, but its same-store sales fell 0.4%. So the top-line growth was entirely driven by new locations that were opened. There were 57 restaurants opened in the quarter. Same-store sales highlight the performance of locations that have been open for at least a year. So the decline in this figure means that customers aren’t returning as often as they were. While a 0.4% drop isn’t terrible, it is a sign that Chipotle may not be resonating with consumers as well as it once had.
What does Wingstop do?
Again, without getting into the food concept, Wingstop is a fast-food chain. The concept has proven to be very popular over the years, leading to a long period of growth. The first quarter of 2025 wasn’t great for Wingstop, but it was better than the first quarter Chipotle experienced.
The top line of Wingstop’s income statement grew 15.7% with same store sales up 0.5% in the U.S. market, which is its main operating region. That same store figure is a drop from the fourth quarter of 2024 when it achieved 10.1% growth. Slower same-store-sales growth isn’t ideal but it isn’t terrible so long as the figure remains positive, especially when combined with a growing store base. Wingstop opened 126 new locations in the first quarter of 2025.
Is Wingstop a better buy than Chipotle?
There are a number of factors to consider when looking at these two restaurant companies. For example, valuation might be something you examine. But both Wingstop and Chipotle have price-to-earnings ratios of around 45. At one point Wingstop’s P/E was much higher than that of Chipotle, but the deeper price pullback of the shares has resolved that disparity.
Dividends might matter to you. Chipotle doesn’t pay a dividend. Wingstop’s dividend yield is only 0.4% or so. If you are a dividend investor you might want to look elsewhere.
Then there’s each company’s business model. Both are growing via the opening of new locations. But there’s another subtle twist. Above, Chipotle was described as operating restaurants while Wingstop was described as just a fast-food chain. This difference is actually quite important. Chipotle operates nearly all of its restaurants while franchisees operate around 98% of Wingstop’s locations.
CMG data by YCharts
This means that Chipotle is selling food to customers while Wingstop is selling franchises to franchisees. Wingstop is not using an unusual business model in the fast-food space, but it changes the equation somewhat because Wingstop doesn’t have the same operational control over its locations as does Chipotle. More conservative investors will probably prefer Chipotle’s business approach, especially during a weak patch when store-level execution will become increasingly important.
Two restaurants facing headwinds with dramatically different models
The food concept behind Chipotle is fresh Mexican fare. Wingstop is all about chicken wings. While both are reliant on the attractiveness of the types of food they produce, neither seems likely to suddenly fall out of style. But Chipotle has more ability to shift its approach to better match the current environment because it operates its own restaurants. Being more nimble as both of these restaurants face weak same-store-sales results will probably be the more attractive option for most long-term growth investors.
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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends Wingstop and recommends the following options: short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
