TLDR
- Chipotle’s stock fell 7% after-hours despite beating Q4 earnings expectations with 25 cents per share profit and $2.98 billion in revenue
- Same-store sales dropped 2.5% year-over-year while the company opened 132 new locations in Q4
- Management expects flat comparable sales for 2026 and plans menu price increases of 1% to 2% this year
- Margins will face pressure in 2026 as price increases won’t fully offset rising labor and food costs
- Company plans to open 350 to 370 new restaurants in 2026 despite current headwinds from lower-income customers cutting back
Chipotle dropped a reality check on Wall Street Tuesday. The burrito chain beat earnings estimates but told investors to brace for flat sales growth in 2026.
Chipotle Mexican Grill $CMG, Q4-25.
Results:
📊 Adj. EPS: $0.25 🟢
💰 Revenue: $2.98B 🟢
📈 Net Income: $330.9M
🔎 Total revenue increased due to new restaurant openings and gift card breakage revenue. pic.twitter.com/s9hTnA8YhR— EarningsTime (@Earnings_Time) February 3, 2026
The stock tumbled 7% in after-hours trading. Shares are already down 34% over the past year.
Fourth-quarter numbers looked decent on paper. Net revenue climbed 4.9% to $3 billion. Adjusted earnings hit 25 cents per share, just ahead of the 24-cent estimate.
Chipotle Mexican Grill, Inc., CMG
But here’s the catch. Same-store sales fell 2.5% year-over-year.
That growth in total revenue? It came from opening 132 new restaurants in Q4. The existing locations are struggling to keep customers coming back.
Finance chief Adam Rymer laid out the challenge during the earnings call. The company plans to raise menu prices between 1% and 2% this year. That won’t be enough to cover rising labor and food costs.
“Margins in 2026 will be under pressure,” Rymer said. The company is taking less price than the inflation it’s experiencing.
Price Pressures Hit Customer Traffic
Lower-income households are pulling back on dining out. Chipotle warned in October that consumers earning less than $100,000 per year were cutting spending. This group represents about 40% of sales.
Fast-food giants like McDonald’s haven’t made things easier. They’ve rolled out aggressive discount deals. Chipotle meals typically cost $10 to $12, making them less attractive by comparison.
The company expects comparable sales for 2026 to be about flat. Analysts had estimated a 1.86% rise.
Beef prices hit record highs as drought forced ranchers to reduce cattle herds to the smallest size in 75 years. That’s squeezing margins even more.
Restaurant Expansion Continues
Chipotle isn’t slowing down on new locations. The company plans to open 350 to 370 restaurants in 2026.
Management didn’t provide guidance on net revenue or earnings for the year. That’s unusual and suggests uncertainty about the business outlook.
The company is investing in kitchen equipment upgrades to speed up food preparation. Marketing spending is going up too, with more focus on loyalty rewards and limited-time offers.
Early data shows loyal customers are ordering more frequently than others. But getting casual diners back through the door remains the bigger challenge.
Morningstar analyst Ari Felhandler noted the pricing strategy could help Chipotle’s value proposition with consumers. But it will crimp near-term margins since the company won’t fully offset inflation.
Deutsche Bank analyst Lauren Silberman expects foot traffic to turn positive again in 2026. She said Chipotle is unlikely to raise prices until late next year, which could make it more competitive.
About two-thirds of analysts have a Buy rating on the stock. The average target price sits at $45, suggesting 18% upside from current levels.
Oppenheimer’s Brian Bittner called the stock “well-positioned for a spicy revival story this year.” The shares are trading near historically low valuations.
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