Key Stats for Chipotle Stock
- Price Change for Chipotle stock: -19%
- Current Share Price as of Oct. 29: $40
- 52-Week High: $67
- $CMG Stock Price Target: $53
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What Happened?
Chipotle (CMG) stock plunged 19% after it reported disappointing third-quarter results and slashed its full-year same-store sales guidance for the third consecutive quarter.
The burrito chain now expects full-year comps to decline in the low single-digit range—a dramatic reversal from its February forecast calling for low-to-mid single-digit growth.
Third-quarter revenue came in at $3 billion, missing Wall Street’s $3.02 billion estimate. Adjusted earnings per share matched expectations at $0.29, but that was hardly enough to satisfy investors who’ve watched the stock fall 28% this year.
Same-store sales rose just 0.3%, driven entirely by a 1.1% increase in average check size. The real problem: traffic fell 0.8%, marking the third straight quarter of customer visit declines.
CEO Scott Boatwright blamed “persistent macroeconomic pressures” for the weak performance. After outperforming the broader restaurant industry throughout 2024, Chipotle’s higher-income customer base is finally feeling the pinch.
Consumers earning under $100,000 annually—who represent about 40% of sales—have meaningfully reduced their restaurant visits due to economic concerns and inflation.
“We’re not losing that customer. They’re just coming less often,” Boatwright explained on the earnings call.
The pain is particularly acute among 25-to-35-year-olds, a demographic where Chipotle over-indexes. This group faces headwinds from unemployment, student loan repayments, and wage growth that’s barely keeping pace with inflation.
CFO Adam Rymer acknowledged that while marketing investments and new menu items like carne asada and red chimichurri drove some encouraging results, “our underlying trends remained challenged throughout the quarter and into October.”
For the fourth quarter, management expects comps to decline in the low-to-mid single-digit range—suggesting the pain isn’t over yet.
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What the Market Is Telling Us About CMG Stock
The market’s harsh reaction to CMG stock suggests investors are concerned that Chipotle’s premium positioning may be working against it in this environment.
Despite Boatwright’s insistence that the chain offers 20-30% better value than fast-casual peers at roughly $10 per entree versus competitors’ $15 price points, consumers apparently aren’t getting the message.
Research shows some customers incorrectly lump Chipotle in with pricier fast-casual chains. Management also expects cost inflation to hit the mid-single-digit range—primarily driven by tariffs and rising beef costs—and that pressure will continue into 2026.
Chipotle doesn’t plan to fully offset this inflation with price increases in the near term, which will squeeze restaurant margins below the company’s historical targets.
The chain currently carries about 2% menu pricing from an increase taken last December. That pricing will roll off in early December, meaning CMG stock investors should expect the company to essentially exit 2025 with zero net pricing.
For 2026, Rymer said Chipotle will take a “slow and measured approach” to pricing rather than implementing one large increase across all restaurants at once.
Restaurant-level margins fell 100 basis points year-over-year to 24.5% in the third quarter. Labor costs rose 30 basis points to 25.2% of sales, while other operating costs jumped 120 basis points to 15% due to higher marketing spend and lower sales leverage.
Marketing expenses hit 3% of sales—up 90 basis points year-over-year—and management expects that level to continue through Q4 and into 2026.
For CMG stock investors looking for bright spots, unit growth remains strong. Chipotle opened 84 new restaurants in the quarter, including 64 Chipotlanes.
New restaurant productivity is running around 80% with year-two cash-on-cash returns near 60%. Management also raised its 2026 opening target to 350-370 locations, up from this year’s 315-345 range.
The company is also rolling out what it calls HEAP—high-efficiency equipment packages—across its restaurant base over the next three years.
Early results show improvements in food quality, labor efficiency, and throughput. The new dual-sided plancha cooks chicken and steak in half the time, helping restaurants better handle peak periods.
On the innovation front, Chipotle plans to accelerate menu launches in 2026 with 3-4 limited-time protein offers versus the historical cadence of two per year.
New dips like Adobo Ranch and Red Chimichurri have successfully driven transactions, with data showing that customers who buy LTOs increase their frequency and spending over the following year.
Boatwright emphasized that Chipotle won’t resort to discounting despite the challenging environment.
Instead, the company is focusing on operational execution, better communicating its value proposition, and reimagining its loyalty program to drive more customers into the rewards funnel.
The chain is also testing expanded catering capabilities and family meal offerings to capture new occasions beyond its core individual meal business.
However, for CMG stock to recover, Chipotle needs to prove it can return to positive traffic growth. Management continues to believe mid-single-digit comp growth is achievable, but economists cited on the call suggest Q4 and Q1 could be the toughest periods for consumers, with potential easing in Q2.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
