Starbucks and Chipotle both reported better-than-expected same-store sales last quarter, but Starbucks may be the better buy due to its opportunity to recapture lost operating margins. Starbucks global comparable sales rose 7.9%, above the 5.7% consensus, while Chipotle's comps increased 2.2%, topping the 1.3% estimate. Starbucks North American operating margin improved 30 basis points to 13.6%, still well below its prior 21% level, suggesting significant room for recovery under CEO Brian Niccol. Chipotle's restaurant-level margin fell to 25.2% from 27.4% amid commodity and wage inflation. Starbucks trades at a forward price-to-earnings ratio of 35.5 times fiscal 2027 estimates, compared to 28.5 times for Chipotle, but the potential margin expansion gives Starbucks the edge in execution-driven outperformance.
Starbucks CorporationStarbucks reported stronger comps and improved operating margin, with significant room for margin recovery under CEO Brian Niccol, making it a better buy.
Chipotle Mexican Grill IncChipotle's restaurant-level margin fell to 25.2% from 27.4% due to commodity and wage inflation, and its comps growth was lower than Starbucks'.