Chipotle Mexican Grill, the Newport Beach-based chain known for its indulgent burritos and lunch bowls, just endured its worst year ever.
Same-store sales fell last year for the first time since the company went public two decades ago. The downturn, analysts say, reflects an overall slowdown in fast-casual chains – seen as a step above fast food but behind full-service restaurants.
In a K-shaped economy where the few with money are still spending while everyone else is worried about rising prices and keeping their jobs, Chipotle is stuck in a tough spot. It is not a destination for the rich. Instead, it's a skippable treat for those looking to save.
“Our guests [are] We are placing a greater focus on value and quality and reducing overall restaurant spending,” Chipotle CEO Scott Boatwright said last week after the results were announced.
In an uncertain economy hurt by tariffs and an immigration crackdown, consumers are curbing discretionary spending and increasingly looking for the best value on essentials like lunch and dinner.
Chipotle has continued to grow in popularity since it opened in Denver in 1993. In 2018, the company moved its headquarters to California.
The burrito staple opened 334 new locations last year, bringing its total to around 4,000. The company's net income was $1.5 billion in 2025, virtually unchanged from the previous year. Comparable sales lost momentum, falling about 2% in 2025 after rising 7.4% in 2024.
In an earnings call earlier this month, executives estimated same-store sales would remain about flat in 2026 and 350 to 370 new restaurants would open.
“As we head into 2026, the consumer landscape is changing,” Boatwright said.
He tried to suggest that Chipotle customers come from the rising part of the K in the K-shaped economy, so no big price cuts are planned to attract new customers. Boatwright said on the earnings call that 60% of Chipotle's core customers earn more than $100,000 a year.
“We've learned that the guests tend to be younger and a little higher income, and we're going to lean into that,” Boatwright said.
The company's suggestion that it wasn't doing much more for cost-conscious consumers sparked an online debate that the burrito giant was no longer for regular people.
McDonald's these days has shown the value of providing more value. The company said this week that its sales rose after the launch of its $5 meal deal last year, part of a broader price war between fast-food restaurants.
Chipotle has tried to add value by not raising its prices as much as inflation would require, reviving a rewards program, testing a lower-priced “happy hour” and offering smaller portions at lower prices.
Chipotle came under fire in 2024 for distributing inconsistent portion sizes, but has since recommitted to serving every customer a “generous” portion.
Late last year, Chipotle launched a high-protein menu that includes inexpensive options like a cup of chicken or steak for about $4. Protein is trending as increases in GLP-1 cause many Americans to eat less and focus on getting the most out of their meals.
“This will be a banner year for Chipotle to get back on track,” said Jim Salera, restaurant analyst at Stephens. “Chipotle has traditionally been much more resilient to consumer ups and downs, but no one is immune.”
The company has overcome other challenges in the past. His business suffered a setback when it served tainted food that sickened more than 1,100 people in the United States between 2015 and 2018. The company paid a $25 million fine to resolve criminal charges related to the outbreaks.
Some full-service restaurants are also cutting prices to levels that compete with Chipotle, analysts said. A Chipotle burrito or chipotle bowl plus drink costs around $15, while value-focused full-service restaurant Chili's offers a multi-course meal for less than $11.
“The price advantage that fast casual has over other segments has declined significantly,” said Aneurin Canham-Clyne, who covers restaurants for the trade publication Restaurant Dive.
Middle- and upper-income consumers ages 25 to 30 make up a significant portion of Chipotle's business, but many are looking for cheaper ways to get their meals. Fast-casual chains must rely on consumers with a range of incomes, not just the top 20% of households, Canham-Clyne said.
“Employees making low six figures in major cities who are feeling the heat of services inflation or feel insecure in their jobs because of AI will save a little more money,” he said.
Chipotle shares have fallen more than 37% in the past year, and they're not the only fast-casual company struggling in the stock market. Sweetgreen, which is headquartered in Los Angeles and targets a health-conscious consumer in Southern California, has seen its shares plunge 80% over the past year. Shares of Mediterranean bowl spot Cava fell more than 50% over the same period.
Chipotle shares closed at $35.84 on Thursday, down 4% on the day.
Canham-Clyne said Chipotle is not yet in distress. The brand has proven consistent and attractive to those seeking high-quality meals at a lower price than most sit-down restaurants.
“They sell a lot of burritos and have a lot of stores,” Canham-Clyne said. “You can weather a little downturn and continue to grow.”
Bir yanıt yazın