Chipotle Struggles Continue in Q4 with Sales Decline
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Should l Buy CMG?
Source: Fool
- Sales Decline: Chipotle's comparable-store sales fell by 2.5% in Q4, with transactions down 3.2%, although the average check size increased by 0.7%, indicating weak consumer demand that could hinder future revenue growth.
- Revenue and Earnings: Overall revenue rose by 4.9% to $2.98 billion, and adjusted earnings per share remained flat at $0.25, slightly above analysts' expectations of $0.24, demonstrating some resilience in profitability despite challenges.
- Margin Pressure: The restaurant-level operating margin decreased by 140 basis points to 24.5%, with Chipotle expecting continued margin pressure in 2026, reflecting a cautious approach to price hikes that may impact long-term profitability.
- Expansion Plans: Chipotle opened 334 new restaurants in 2025 and anticipates launching between 350 and 370 new locations in 2026; despite flat same-store sales forecasts, the company aims to enhance customer engagement through menu innovation and a relaunch of its rewards program to navigate an uncertain economic landscape.
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Analyst Views on CMG
Wall Street analysts forecast CMG stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for CMG is 45.95 USD with a low forecast of 35.00 USD and a high forecast of 56.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
25 Analyst Rating
18 Buy
7 Hold
0 Sell
Moderate Buy
Current: 38.450
Low
35.00
Averages
45.95
High
56.00
Current: 38.450
Low
35.00
Averages
45.95
High
56.00
About CMG
Chipotle Mexican Grill, Inc. is a restaurant company. The Company develops and operates restaurants that serve a menu of burritos, burrito bowls, quesadillas, tacos, and salads, made using fresh ingredients. The Company operates approximately 3839 restaurants in the United States, Canada, the United Kingdom, France, Germany, Kuwait, and United Arab Emirates. It owns and operates all its restaurants in North America and Europe. The Company is focused in serving sourced, classically cooked, real food with wholesome ingredients without artificial colors, flavors or preservatives. Its menu includes Burrito, Burrito Bowl, Lifestyle Bowl, Quesadilla, Salad, Tacos, Kid’s Meal, Chips and Sides, and Build your Own (digital only). It also includes Raymonte’s Chicken Bowl, The Mr. Fantasy Burrito, Carne Asada, Build-Your-Own Chipotle, catering and group order. Its subsidiaries include Chipotle Mexican Grill Canada Corp., Chipotle Mexican Grill France SAS, among others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Chipotle Struggles Continue in Q4 with Sales Decline
- Sales Decline: Chipotle's comparable-store sales fell by 2.5% in Q4, with transactions down 3.2%, although the average check size increased by 0.7%, indicating weak consumer demand that could hinder future revenue growth.
- Revenue and Earnings: Overall revenue rose by 4.9% to $2.98 billion, and adjusted earnings per share remained flat at $0.25, slightly above analysts' expectations of $0.24, demonstrating some resilience in profitability despite challenges.
- Margin Pressure: The restaurant-level operating margin decreased by 140 basis points to 24.5%, with Chipotle expecting continued margin pressure in 2026, reflecting a cautious approach to price hikes that may impact long-term profitability.
- Expansion Plans: Chipotle opened 334 new restaurants in 2025 and anticipates launching between 350 and 370 new locations in 2026; despite flat same-store sales forecasts, the company aims to enhance customer engagement through menu innovation and a relaunch of its rewards program to navigate an uncertain economic landscape.
See More
Starbucks Shares Up 13.7% Year-to-Date: Is It a Buy?
- Strong Earnings Report: Starbucks reported a 5% increase in global revenue and growing same-store sales in its Q4 2025 earnings, alongside the opening of 128 new coffeehouses, indicating robust market demand, although overall performance still requires improvement.
- China Market Transformation: The agreement with Boyu Capital to convert its China locations into a joint venture, with Boyu taking up to a 60% stake, could save Starbucks $39 million monthly in operating costs, yet raises concerns about brand management and operational oversight.
- Significant Membership Growth: As of last quarter, Starbucks boasted 35.5 million active members, a substantial increase from 24 million at its peak in 2021, reflecting enhanced brand loyalty, despite a sharp decline in net income.
- Increased Valuation Risk: With a P/E ratio nearing 78, significantly above the S&P 500 average of 29.5, the market appears to have overly optimistic expectations for Starbucks' recovery, prompting investors to carefully consider their positions in the stock.
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Chipotle Faces Sales Decline, Plans to Attract Customers
- Sales Decline: Chipotle experienced a 3.2% drop in transactions and a 2.5% decline in comparable sales in Q4 2025, indicating a trend of customer loss, with overall comparable sales down 1.7% for the year, posing challenges for future growth.
- Pricing Strategy Adjustment: To combat 3% to 4% cost inflation, Chipotle plans to raise prices by 1% to 2% in 2026, which will keep its price increases below industry averages, potentially impacting profit margins but aimed at attracting customers back.
- Efficiency Equipment Investment: Chipotle has installed high-efficiency equipment in 350 restaurants, reducing prep time by 2 to 3 hours and eliminating prep time during peak hours, with plans to expand to about 2,000 restaurants by the end of 2026, enhancing customer satisfaction and improving profitability.
- Long-Term Growth Outlook: Despite poor short-term financial performance, Chipotle is committed to attracting customers through a strong value proposition and faster service, which is expected to yield returns for long-term investors, although the market environment remains uncertain.
See More
Texas Instruments Acquires Silicon Labs in $7.5B Deal
- Acquisition Agreement: Texas Instruments is set to acquire Silicon Labs for $231 per share in an all-cash transaction valued at $7.5 billion, which not only boosts Silicon Labs' market valuation but also enhances Texas Instruments' competitive edge in the semiconductor sector.
- Positive Market Reaction: Following the acquisition announcement, Silicon Labs' stock surged by 49%, indicating strong investor confidence in the deal and reflecting optimistic expectations for consolidation within the semiconductor industry.
- Strong Earnings Performance: Silicon Labs reported an adjusted EPS of 56 cents for Q4, slightly above the consensus estimate of 55 cents, demonstrating stable financial performance that enhances the attractiveness of the acquisition.
- Industry Consolidation Trend: This acquisition represents a strategic move for Texas Instruments to expand its product line and signifies an acceleration in semiconductor industry consolidation, potentially triggering more similar deals that could reshape the market landscape.
See More
Chipotle's 2025 Performance Analysis and Outlook
- Stable Revenue Growth: In the first nine months of 2025, Chipotle's revenue grew by 6% year-over-year, demonstrating brand resilience and sustained market demand despite inflation and consumer spending pressures.
- Increased Digital Sales Share: Digital sales accounted for 37% of total revenue in Q3, reflecting the company's ongoing investments in mobile ordering and loyalty programs, which enhanced customer experience and drove sales growth.
- Management Pricing Strategy: Chipotle opted not to aggressively raise prices to offset rising food and labor costs, focusing instead on value, which compressed margins in the short term but preserved customer trust and brand equity.
- Long-Term Growth Potential: Despite challenges in 2025, Chipotle continues to show strong cash flow and attractive returns on capital, with future investment returns likely relying more on execution than valuation expansion, making 2026 a critical year to monitor.
See More
Chipotle's 2026 Outlook and Risk Analysis
- Customer Traffic Risk: In 2025, Chipotle's same-store sales growth was only 0.3%, primarily due to a decline in customer visit frequency; if traffic does not recover in 2026, it could lead to flat or declining transactions, putting pressure on valuation.
- Intensified Competitive Landscape: Facing discounting and promotional strategies from other restaurant brands, Chipotle has chosen to avoid heavy discounting to protect brand equity, although this may risk short-term traffic and market share.
- Margin Pressure: Chipotle experienced a 1% compression in operating margin in 2025 due to rising food and labor costs; if these costs remain volatile, the company may face difficult pricing decisions that could impact profitability.
- Digital Sales Complexity: While digital ordering enhances convenience and customer loyalty, it also incurs higher fulfillment costs; unless offset by efficiency gains or pricing adjustments, a high digital mix could constrain restaurant-level margins.
See More
Chipotle Struggles Continue in Q4 with Sales Decline
- Sales Decline: Chipotle's comparable-store sales fell by 2.5% in Q4, with transactions down 3.2%, although the average check size increased by 0.7%, indicating weak consumer demand that could hinder future revenue growth.
- Revenue and Earnings: Overall revenue rose by 4.9% to $2.98 billion, and adjusted earnings per share remained flat at $0.25, slightly above analysts' expectations of $0.24, demonstrating some resilience in profitability despite challenges.
- Margin Pressure: The restaurant-level operating margin decreased by 140 basis points to 24.5%, with Chipotle expecting continued margin pressure in 2026, reflecting a cautious approach to price hikes that may impact long-term profitability.
- Expansion Plans: Chipotle opened 334 new restaurants in 2025 and anticipates launching between 350 and 370 new locations in 2026; despite flat same-store sales forecasts, the company aims to enhance customer engagement through menu innovation and a relaunch of its rewards program to navigate an uncertain economic landscape.
See More
Starbucks Shares Up 13.7% Year-to-Date: Is It a Buy?
- Strong Earnings Report: Starbucks reported a 5% increase in global revenue and growing same-store sales in its Q4 2025 earnings, alongside the opening of 128 new coffeehouses, indicating robust market demand, although overall performance still requires improvement.
- China Market Transformation: The agreement with Boyu Capital to convert its China locations into a joint venture, with Boyu taking up to a 60% stake, could save Starbucks $39 million monthly in operating costs, yet raises concerns about brand management and operational oversight.
- Significant Membership Growth: As of last quarter, Starbucks boasted 35.5 million active members, a substantial increase from 24 million at its peak in 2021, reflecting enhanced brand loyalty, despite a sharp decline in net income.
- Increased Valuation Risk: With a P/E ratio nearing 78, significantly above the S&P 500 average of 29.5, the market appears to have overly optimistic expectations for Starbucks' recovery, prompting investors to carefully consider their positions in the stock.
See More
Chipotle Faces Sales Decline, Plans to Attract Customers
- Sales Decline: Chipotle experienced a 3.2% drop in transactions and a 2.5% decline in comparable sales in Q4 2025, indicating a trend of customer loss, with overall comparable sales down 1.7% for the year, posing challenges for future growth.
- Pricing Strategy Adjustment: To combat 3% to 4% cost inflation, Chipotle plans to raise prices by 1% to 2% in 2026, which will keep its price increases below industry averages, potentially impacting profit margins but aimed at attracting customers back.
- Efficiency Equipment Investment: Chipotle has installed high-efficiency equipment in 350 restaurants, reducing prep time by 2 to 3 hours and eliminating prep time during peak hours, with plans to expand to about 2,000 restaurants by the end of 2026, enhancing customer satisfaction and improving profitability.
- Long-Term Growth Outlook: Despite poor short-term financial performance, Chipotle is committed to attracting customers through a strong value proposition and faster service, which is expected to yield returns for long-term investors, although the market environment remains uncertain.
See More
Texas Instruments Acquires Silicon Labs in $7.5B Deal
- Acquisition Agreement: Texas Instruments is set to acquire Silicon Labs for $231 per share in an all-cash transaction valued at $7.5 billion, which not only boosts Silicon Labs' market valuation but also enhances Texas Instruments' competitive edge in the semiconductor sector.
- Positive Market Reaction: Following the acquisition announcement, Silicon Labs' stock surged by 49%, indicating strong investor confidence in the deal and reflecting optimistic expectations for consolidation within the semiconductor industry.
- Strong Earnings Performance: Silicon Labs reported an adjusted EPS of 56 cents for Q4, slightly above the consensus estimate of 55 cents, demonstrating stable financial performance that enhances the attractiveness of the acquisition.
- Industry Consolidation Trend: This acquisition represents a strategic move for Texas Instruments to expand its product line and signifies an acceleration in semiconductor industry consolidation, potentially triggering more similar deals that could reshape the market landscape.
See More
Chipotle's 2025 Performance Analysis and Outlook
- Stable Revenue Growth: In the first nine months of 2025, Chipotle's revenue grew by 6% year-over-year, demonstrating brand resilience and sustained market demand despite inflation and consumer spending pressures.
- Increased Digital Sales Share: Digital sales accounted for 37% of total revenue in Q3, reflecting the company's ongoing investments in mobile ordering and loyalty programs, which enhanced customer experience and drove sales growth.
- Management Pricing Strategy: Chipotle opted not to aggressively raise prices to offset rising food and labor costs, focusing instead on value, which compressed margins in the short term but preserved customer trust and brand equity.
- Long-Term Growth Potential: Despite challenges in 2025, Chipotle continues to show strong cash flow and attractive returns on capital, with future investment returns likely relying more on execution than valuation expansion, making 2026 a critical year to monitor.
See More
Chipotle's 2026 Outlook and Risk Analysis
- Customer Traffic Risk: In 2025, Chipotle's same-store sales growth was only 0.3%, primarily due to a decline in customer visit frequency; if traffic does not recover in 2026, it could lead to flat or declining transactions, putting pressure on valuation.
- Intensified Competitive Landscape: Facing discounting and promotional strategies from other restaurant brands, Chipotle has chosen to avoid heavy discounting to protect brand equity, although this may risk short-term traffic and market share.
- Margin Pressure: Chipotle experienced a 1% compression in operating margin in 2025 due to rising food and labor costs; if these costs remain volatile, the company may face difficult pricing decisions that could impact profitability.
- Digital Sales Complexity: While digital ordering enhances convenience and customer loyalty, it also incurs higher fulfillment costs; unless offset by efficiency gains or pricing adjustments, a high digital mix could constrain restaurant-level margins.
See More
