TLDR

  • Chipotle’s stock declined 7% in after-hours trading even though it exceeded Q4 earnings forecasts with a 25-cent per share profit and $2.98 billion in revenue
  • Same-store sales decreased by 2.5% year-over-year, and the company opened 132 new locations during Q4
  • Management anticipates flat comparable sales for 2026 and intends to raise menu prices by 1% to 2% this year
  • Margins will come under pressure in 2026 because the price hikes won’t fully cover increasing labor and food costs
  • The company plans to open between 350 and 370 new restaurants in 2026, even amid current challenges from lower-income customers reducing their spending

Chipotle delivered a reality check to Wall Street on Tuesday. The burrito chain exceeded earnings estimates but advised investors to prepare for flat sales growth in 2026.

The stock dropped 7% in after-hours trading. Shares have already fallen 34% over the past year.

Fourth-quarter figures appeared solid on paper. Net revenue increased by 4.9% to $3 billion. Adjusted earnings reached 25 cents per share, slightly beating the 24-cent forecast.

CMG Stock Card

But there’s a catch: same-store sales decreased by 2.5% year-over-year.

Where did that total revenue growth come from? It stemmed from opening 132 new restaurants in Q4. Existing locations are having trouble retaining customers.

Finance head Adam Rymer outlined the challenge during the earnings call. The company intends to increase menu prices by 1% to 2% this year. That won’t be sufficient to cover rising labor and food costs.

“Margins in 2026 will be under pressure,” Rymer stated. The company is implementing smaller price hikes than the inflation it’s facing.

Price Pressures Hit Customer Traffic

Lower-income households are cutting back on dining out. warned in October that consumers making less than $100,000 annually were reducing their spending. This group accounts for roughly 40% of sales.

Fast-food chains like haven’t helped matters. They’ve launched aggressive discount offers. Chipotle meals usually cost between $10 and $12, making them less appealing in comparison.

The company forecasts comparable sales for 2026 to be roughly flat. Analysts had predicted a 1.86% increase.

Beef prices reached record highs as drought forced ranchers to shrink their cattle herds to the smallest size in 75 years. This is putting even more pressure on margins.

Restaurant Expansion Continues

Chipotle isn’t slowing its new location growth. The company plans to open between 350 and 370 restaurants in 2026.

Management didn’t issue guidance for net revenue or earnings this year. This is unusual and indicates uncertainty about the business’s future.

The company is investing in kitchen equipment upgrades to accelerate food preparation. Marketing spending is also increasing, with a greater focus on loyalty rewards and limited-time promotions.

Early data indicates loyal customers are ordering more often than other patrons. However, luring casual diners back remains the larger challenge.

Morningstar analyst Ari Felhandler noted the pricing strategy could enhance Chipotle’s value proposition for consumers. But it will limit near-term margins because the company won’t fully offset inflation.

Deutsche Bank analyst Lauren Silberman expects foot traffic to turn positive again in 2026. She stated Chipotle is unlikely to raise prices until late next year, which could boost its competitiveness.

Roughly two-thirds of analysts have a Buy rating on the stock. The average target price is $45, implying an 18% upside from current levels.

Oppenheimer’s Brian Bittner described the stock as “well-positioned for a spicy revival story this year.” The shares are trading close to historically low valuations.