Shares of Chipotle Mexican Grill, Inc. (NYSE: CMG) experienced notable volatility on Wednesday following the release of its fourth-quarter financial results. While the stock held relatively steady during intraday trading, the underlying data from the quarter painted a complex picture of performance metrics and operational challenges.
In the reported quarter, Chipotle achieved adjusted earnings per share (EPS) of 25 cents, surpassing the consensus estimate of 24 cents. On the top line, the company generated $2.98 billion in revenue, slightly exceeding analyst expectations of $2.96 billion. These figures underscore the company’s ability to navigate prevailing market conditions while delivering solid financial metrics.
However, comparable restaurant sales provided a contrasting viewpoint. Chipotle recorded a 2.5% decrease year-over-year in comparable restaurant sales during the fourth quarter, driven primarily by a 3.2% reduction in customer transactions. This decline was somewhat mitigated by a 0.7% increase in the average transaction value, indicating that customers who did visit restaurants spent marginally more per visit.
Profitability metrics also highlighted pressures. The company’s operating margin for the quarter contracted to 14.1%, down from 14.6% in the same period the previous year. Similarly, restaurant-level operating margin declined from 24.8% to 23.4%. These margin compressions reflect an operational environment impacted by factors such as increased labor costs and shifting sales patterns.
Within the quarter, Chipotle expanded its footprint by inaugurating 132 company-operated restaurants, including 97 locations equipped with a Chipotlane—a drive-through pickup service enhancing digital order efficiency. In addition, Chipotle opened seven international partner-operated outlets. Digital sales played a significant role, constituting 37.2% of total food and beverage revenue, reflecting ongoing shifts towards online and app-based ordering platforms.
Examining cost components, food, beverage, and packaging expenses accounted for 30.2% of total revenue—showing a modest improvement compared to the previous year. Conversely, labor expenses rose to 25.5% of revenue, a development attributed to wage inflation pressures and reduced volume due to lower customer traffic.
From a capital allocation standpoint, Chipotle actively repurchased shares during the quarter, spending $741.6 million at an average price of $34.14 per share. As of the end of December 2025, the company maintained remaining authorization to buy back approximately $1.7 billion of stock, signaling continued confidence in returning value to shareholders.
Chief Executive Officer Scott Boatwright outlined the company’s strategic outlook, detailing the "Recipe for Growth" initiative. This plan centers on accelerating customer transactions alongside improving order accuracy, operational efficiency, and speed of service, all while pursuing further expansion of the restaurant portfolio.
In response to the quarterly disclosures, equity analysts largely retained bullish stances on Chipotle’s prospects but tempered near-term valuations by lowering price targets. Piper Sandler’s Brian Mullan upheld an Overweight rating but revised his target price from $47 to $44. Wells Fargo’s Zachary Fadem similarly maintained an Overweight rating while reducing the target from $50 to $45.
Other analyst adjustments followed suit. Keybanc’s Eric Gonzalez kept his Overweight rating but cut the price target from $45 to $42. Stifel's Chris O’Cull also preserved a Buy rating, lowering his target price from $50 to $45. Meanwhile, Telsey Advisory Group’s Sarang Vora maintained an Outperform rating and slightly reduced his price target from $50 to $48.
Currently, Chipotle shares are trading near previous levels after these updates, with a modest decline of 0.64% to $38.92 per share as observed during market hours. This behavior reflects a market balancing the company’s sustained operational initiatives against headwinds in sales volume and cost pressures.
In sum, Chipotle’s latest quarterly report illustrates mixed results as it moves forward with growth strategies amid evolving consumer trends and cost dynamics. The modifications in analyst price targets suggest ongoing scrutiny regarding near-term performance while recognizing long-term potential.