Shake Shack vs. Chipotle: Which Is the Better Buy?

2025-12-24 17:20:00 ET

In a year where the S&P 500 has returned 16%, it's striking to see shares of both Shake Shack (NYSE: SHAK) and Chipotle (NYSE: CMG) suffer so badly. Both stocks are down more than 30% year to date, and while the entire fast-casual dining sector has been under pressure this year, that doesn't fully explain their sell-offs. After all, the AdvisorShares Restaurant ETF , a pure-play fund designed to track the broader sector, is down only 3% year to date.

Despite their similar stock trajectories for the year, these fast-casual dining companies are fighting different battles. Here's why I'd much rather own shares of Shake Shack -- though neither is a buy today.

Since Chipotle's initial public offering (IPO) nearly 20 years ago, shares have returned just over 4,000%. Coincidentally, it just opened its 4,000th restaurant last week, an sevenfold increase from the 581 restaurants it had up and running in 2006, the year of its IPO. That year, it reported $820 million in revenue and $41.4 million in net income, with same-store sales growing 19.7% in the first quarter. For all of 2006, same-store sales grew 11.9%, to $1.61 billion. The company even managed to grow same-store sales by 2.2% during the financial crisis of 2009, and 15 years later, during the pandemic, it grew same-store sales by 15.2% for 2021.

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