What Was Once One of the Hottest Consumer Stocks Issues a Warning to Wall Street

Ongoing macroeconomic uncertainty, particularly around a K-shaped economy in which affluent people are doing well but lower-income households might be struggling, is causing trouble in the equity market. Some businesses that used to thrive are now facing a new reality. And it can have implications for your portfolio.

This consumer stock was once one of the hottest on Wall Street. But it's now issuing a warning. Here's what investors need to know.

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Certain consumers are struggling

In 2025, Chipotle Mexican Grill (NYSE: CMG) reported a decline in traffic for four straight quarters. This disappointing trend helps to explain why shares tanked 39% last year and are down 46% from their June 2024 all-time high (as of Feb. 13). Investors aren't used to seeing this leading restaurant chain falter.

Same-store sales fell 1.7% in 2025. And the company's management team expects them to be flat in 2026. That's not encouraging at all. And it might spell a difficult road ahead to return to growth.

It comes down to consumer behavior. Consumer confidence hit a 12-year low in the U.S. in January. Lower-income consumers are eating out less. As these consumers relentlessly search for value in an effort to stretch every dollar, it is hurting demand for Chipotle.

The leadership team is leaning into menu innovation to drive excitement. Chipotle will increase that innovation by introducing four limited-time offers in 2026. Hopefully this has an impact.

Patience is critical in times like these

Investors can find reasons to adopt an upbeat view. The soft demand Chipotle is facing is industrywide and not anything unique to the business. So the situation can fix itself once market conditions improve.

Chipotle's growth strategy isn't changing, either. The business opened 334 new company-owned restaurants in 2025. It will open 350 to 370 net new locations in 2026. CEO Scott Boatwright still firmly believes there will be 7,000 stores in North America in the long run, up from about 4,000 today.

"With our brand strength and customer loyalty as our foundation, we will continue executing our strategy and expanding our runway for extraordinary growth," CFO Adam Rymer said on the fourth-quarter 2025 earnings call.

And from an investment perspective, there has rarely been a better time to add Chipotle to your portfolio this decade. The current price-to-earnings ratio of 32 represents a 45% discount to the trailing-five-year average multiple.

I think it's only a matter of time until Chipotle returns to better financial performance. Investors willing to take the risk now, and who can also be patient, can see impressive returns over the next five years.

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