Key Points
Chipotle once again struggled bringing consumers into its restaurants.
The company issued conservative guidance, looking for flat same-store sales growth in 2026.
Despite its struggles, the stock is still not cheap.
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Chipotle Mexican Grill's (NYSE: CMG) struggles continued in the fourth quarter, as the fast-casual Tex-Mex restaurant saw its comparable-store sales fall for the third time in four quarters.
However, the stock was able to brush off the results and uninspiring guidance. That could be a sign the stock has bottomed after losing 38% of its value in 2025.
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Let's take a closer look at its report and prospects to see if investors should be scooping up shares in the stock.
Image source: Getty Images.
Struggles continue
After seeing its same-store sales tick up slightly by 0.3% in Q3, Chipotle once again saw its comparable-restaurant sales slip, dropping 2.5% in Q4. Transactions sank 3.2%, while its average check size rose 0.7%.
Overall, Chipotle's revenue rose by 4.9% to $2.98 billion in the quarter, while adjusted earnings per share (EPS) were flat at $0.25. That was a sliver ahead of analysts' expectations, which were for EPS of $0.24 of sales of $2.96 billion, according to LSEG.
Restaurant-level operating margin fell by 140 basis points to 24.5%. This is one of the more important metrics in the restaurant industry, as it measures how profitable individual restaurants are. Chipotle expects its margins to remain under pressure in 2026 as it will keep price hikes to a minimum. Its long-term goal is to eventually get to average unit volumes of $4 million (it's currently at $3.1 million) and a 30% restaurant-level operating margin.
The company continued to add new locations, opening 334 company-owned restaurants in 2025 and 345 in total. It anticipates opening between 350 and 370 in 2026, with between 10 and 15 of them in international markets with partners. It ended the year with 4,042 restaurants and believes it can expand to 7,000 around the globe.
Chipotle forecast that same-store sales would be flat in 2026, saying it wanted to be conservative given an uncertain consumer and economic environment. However, it is not just sitting still and has been happy with its recent high-protein menu launch. It also plans to lean into menu innovation and increase its number of limited-time offerings to four in 2026. It will also relaunch its rewards program this spring to help drive customer engagement.
Is the stock a buy?
Sometimes setting the bar low can be the best thing for a stock, and that appears to be what Chipotle is trying to do. However, the stock isn't exactly in bargain bin territory, trading at a forward price-to-earnings (P/E) multiple of more than 32 times based on 2026 analyst estimates. Given its recent performance and the resurgence of casual sit-down chains, where people are seeing better value, I'd stay on the sidelines, as there are better investment options in the consumer discretionary space.
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Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends London Stock Exchange Group Plc and recommends the following options: short March 2026 $42.50 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
