Has Chipotle Mexican Grill, Inc. (CMG) Become the Perfect Stock?

Chipotle’s troubles began last summer, when the company announced a slowdown in customer traffic and a drop in comparable sales growth below the key 10% figure. That trend has continued, and in its most recent quarterly results from earlier this month, Chipotle saw only 3.8% growth in same-store sales, well below its long-term trend.

With food inflation playing a role in squeezing margins, Chipotle and its peers are fighting harder than ever to emphasize their respective strengths. Yum! Brands, Inc. (NYSE:YUM) got an endorsement from David Einhorn, who argues that its Taco Bell unit is taking business away from Chipotle. At the same time, new player Chuy’s Holdings Inc (NASDAQ:CHUY) is seeking to expand across the country, and although its focus is more on the casual-dining segment than on speedy food, its price points are fairly close to Chipotle’s.

Still, Chipotle has tapped into one of the biggest trends among restaurants: lower-calorie offerings. As customers start to value food quality, Chipotle stands to gain from the increased traffic among those seeking healthier fare from their fast-casual food. Even though McDonald’s Corporation (NYSE:MCD) and Denny’s Corporation (NASDAQ:DENN) have offered low-calorie menus, they both still lack the perception of being health-conscious, and that should give Chipotle a big advantage over both companies.

For Chipotle to improve, it needs to restore investor confidence in its growth prospects. If its ShopHouse Asian Kitchen concept takes off, that could be the growth driver Chipotle needs to get closer to perfection.

The article Has Chipotle Become the Perfect Stock? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Chipotle Mexican Grill and McDonald’s.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.