Jon Quast

Those average unit volumes, the sales per location per year, have gone up consistently over the last 20 years, let's say.

Lower sales volume at a location is going to lead to lower profit margins.

That's just how it works.

Accordingly, the restaurant-level operating margin has fallen over the past year.

Not a ton, it's still good, but it has dropped.

You start looking at a company like Chipotle that has already scaled so much, almost 4,000 locations right now, it thinks that it can add 3,000 more.

But are those next 3,000 locations going to be as high of sale volume, as high quality as the last 4,000?

That's really the question.

If it's adding a lot of underperforming new stores, then

it does drag down the profits.

I think it's a little bit dismissive to say that people aren't eating out as much.

There's definitely some shifts happening in the market.

We're seeing some of those more family-oriented casual dining chains doing a little bit better than they have in times past.

It seems like there's some shifts happening.

I will say with Chipotle, one of the interesting things is, it's in a very strong financial position.

That makes it very hard to count it out.

It's still earned $1.5 billion in net income over the past year.

It has $1.8 billion in cash and investments, no debt other than its lease liability.

It's still in a great position that it can pivot the business as it needs to, and it can still give cash back to shareholders.

I'd be very hesitant to say Chipotle's best days are over.