Investing in the restaurant industry presents challenges. These include changing consumer tastes and economic pressures that cause people to cut back on discretionary spending.

Right now, there’s a lot of economic uncertainty, including from the administration’s tariff policy. That presents short-term headwinds, including potentially higher costs and lower customer traffic.

However, challenging times can also present a buying opportunity for certain cyclical stocks, provided investors are willing to stomach short-term volatility.

Chipotle Mexican Grill (CMG -0.38%) and Dutch Bros (BROS -2.54%) stock prices have moved in opposite directions this year. But both remain solid businesses with strong long-term growth potential.

1. Chipotle Mexican Grill

Chipotle Mexican Grill (CMG -0.38%) has distinguished itself from fast food chains. It serves high-quality food (e.g., without artificial colors, flavors, and preservatives) at reasonable prices. Management has also found ways to enhance the customer experience, particularly via digital ordering and Chipotlanes (drive-through lanes to pick up digital orders).

The concept has proven very successful over the years. Chipotle Mexican Grill opened its first restaurant in 1993, and it has grown to over 3,800 locations. Management continues to see a growth opportunity, opening 61 new restaurants in the second quarter, and it expects a total of 315 to 345 additional locations for the entire year.

However, same-store sales (comps) have been sluggish lately. Q2 comps dropped 4%. Unfortunately, that was driven by lower traffic, which accounted for a 4.9-percentage-point drop. Higher spending was responsible for a 0.9-percentage-point increase.

Management blamed the lower comps on larger economic pressures that impacted overall consumer spending. It noted that there was sales momentum at the end of the quarter with positive transaction volume and comps. The company expects flat comps for the year, which would show an improvement from the first half of the year.

However, the recent sales results have sent the stock price down. Chipotle’s shares have dropped 27% this year (through Aug. 15), while the S&P 500 index has gained 9.7%.

It’s hard to call the shares cheap, but they have become less expensive over this period. The stock’s price-to-earnings (P/E) ratio has fallen from 54 to 39. The S&P 500 sells at a 30 P/E multiple.

Its offerings of fresh ingredients have proven successful. With its long-term growth potential remaining intact, a higher valuation seems warranted.

2. Dutch Bros

Dutch Bros (BROS -2.54%) offers beverages and select food items at its drive-through locations. Starting modestly in 1992, it has expanded by focusing on high-quality, handcrafted beverages, quick service, and strong customer service.

The concept clearly has appealed to customers. Q2 comps increased 6.1%. People continued flocking to its locations, with traffic accounting for 3.7 percentage points of the increase. Management expects comps to increase 4.5% for the year.

A large growth opportunity remains. At the end of 2024, Dutch Bros had 982 shops (about two-thirds were franchises) across 18 states. It had 1,043 locations in 19 states at the end of June, and management plans to open at least another 100 shops this year.

The company’s success and growth opportunities haven’t been lost on investors. Dutch Bros’ share price has gained 20.3% this year, more than twice the S&P 500’s appreciation. Investors continue to expect this success to continue, with the shares trading at a P/E multiple of 175.

If this valuation makes you nervous, you can smooth out your purchase price by investing the same amount at regular intervals, a strategy called dollar-cost averaging.

Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends Dutch Bros and recommends the following options: short September 2025 $60 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.