Time to Sell Chipotle (CMG)?

Chipotle Mexican Grill (NASDAQ:CMG) has rightly been one of the stock darlings of investors for some time, but now that circumstances surrounding the industry are getting worse, in regard to rising food costs and the overall economy, whereby people tend to eat out less (higher gas prices), even this high-flying stock will need to be approached cautiously going forward.

Like retailers and airlines, restaurants like Chipotle face the problem of rising inputs and reaching the top level of how much they can raise prices.

They could pull something like retailers do with packaging, offer smaller meals for the same price as before. But other than that, there's not much more they can do. Either it boosts its prices, eats the shrinking margins or changes its meal sizes.

The problem isn't going to come from its competitors, as they face the same issues. The problem comes from the consumer and whether they feel like they can afford to go out and eat, or look for places in their budgets to save, which in the case of eating out, is usually near the top of the list.

Chipotle will face challenges in satisfying shareholders and potential investors, as their strong growth cycle may be under pressure, even if they continue to roll out new restaurants.

Same-store sales are sure to fall, or at least margins and earnings will come under pressure. This doesn't look like something that will go away anytime soon either. It appears to be tough times again for the economy in general, which will include even those like Chipotle which have been growing at strong rates.

Chipotle closed Friday at $269.24, dropping $5.46, or 1.99 percent.