Chipotle Mexican Grill (NYSE: CMG) is experiencing a bit of a comeback on Wall Street.
The stock is up by 17% over the past month as earnings approach
However, it has been a tough year for the stock, and the road to a prolonged recovery is filled with speed bumps. The rally may fizzle soon, especially after the company reports earnings on July 29. Customers are feeling the inflation pinch Higher inflation has elevated living costs, leaving people with less money to spend on discretionary expenses and less interest in paying for marked-up items.
Chipotle falls into both of those categories, and its most recent quarterly results showed that the fast-casual restaurant chain was losing momentum. The 7.4% year-over-year revenue boost it reported in Q1 looked good, but the key highlight was that comparable restaurant sales only increased by 0.5%. That low comparable sales rate indicates that customers are returning less often, and their order sizes aren’t growing much.