Chipotle Mexican Grill Stock Is Interesting, but Here's What I'd Buy Instead

Investing frequently comes down to choices. After all, you want to invest in the best stock for your portfolio, taking into account your risk tolerance.

When looking to invest in the restaurant industry, Chipotle Mexican Grill (NYSE: CMG) has long drawn customers to its fast-casual concept, which is a step above fast-food restaurants in price and food quality.

Chipotle Mexican Grill could be of interest, but here's why I think Dutch Bros (NYSE: BROS) makes a better long-term investment.

Image source: Getty Images.

Why Chipotle is interesting

Chipotle's menu includes traditional fare like burritos, burrito bowls, quesadillas, tacos, and salads. But it draws customers with its fresh ingredients that don't have artificial flavors, colors, or preservatives.

However, the company hit a snag last year. Same-restaurant sales (comps) fell 1.7%, with traffic causing a 2.9-percentage-point drop, although higher spending added 1.2 percentage points.

It's always disconcerting when comps fall, particularly due to fewer people frequenting the restaurant. However, broad macroeconomic factors likely played a role. After all, people will eat out less when they're facing higher prices for everyday items.

There's also room for expansion. Management added 321 locations last year, finishing with over 4,000.

The stock price plummeted 36.4% over the last year through Feb. 13, and the shares trade at a better valuation, but it's not a value stock. While Chipotle's price-to-earnings (P/E) ratio has come down from 50 to 32, it's still more expensive than the S&P 500 index's 29 multiple.

Chipotle has become more interesting for patient investors, but there's an even better growth opportunity.

The case for Dutch Bros

Dutch Bros owns and franchises drive-thru beverage locations. The company differentiates itself based on customer service, fast service, and high quality. Its menu includes coffee, energy drinks, and items like tea, lemonade, and smoothies.

You can tell it's executing well based on its sales results. The company continues to produce positive comps, including 5.6% last year. Importantly, higher traffic contributed 3.2 percentage points, with the balance coming from increased spending.

Last year, Dutch Bros opened about 150 locations. With over 1,100 locations across 25 states, Dutch Bros has an immense growth opportunity in front of it. For instance, it doesn't have any locations in the Northeast or certain states in the Midwest.

Nonetheless, Dutch Bros shares have dropped 35.1% over the past year. That's likely due to its sky-high valuation compressing. The stock had a P/E multiple of 240 last year. It's still high, but the multiple is a much more reasonable 84.

For those concerned that the stock remains expensive, you can spread out your purchases using dollar-cost averaging, which involves investing the same amount during regular intervals (e.g., quarterly). That way, you smooth out your purchase price, buying more shares at better valuations.

Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill and Dutch Bros. The Motley Fool recommends the following options: short March 2026 $42.50 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.