Why Chipotle Stock Collapsed Last Year

Core Insights - Chipotle's shares fell 38.6% in 2025 due to poor traffic and sales figures, raising concerns about market saturation and future growth potential [1] - The company experienced a significant decline in same-store sales growth, with rates of 0%, 4%, and 0% for the first three quarters of 2025, which is below inflation rates for restaurant input costs [3][4] - Chipotle's operating margin decreased to 16.4% from a previous high of 17%, indicating pressure on profitability due to stagnant same-store sales [4] Financial Performance - Over the last decade, Chipotle achieved cumulative revenue growth of 178%, primarily through new store openings and revenue growth at existing locations [2] - In 2026, Chipotle's share price has begun to recover, increasing by 8.5% year-to-date, but the stock still trades at a price-to-earnings ratio of 36, which is higher than the S&P 500 average of 31 [6] Market Position and Future Outlook - Despite the stock's decline, Chipotle is not considered cheap, and while it plans to grow its store count in North America and explore new markets, concerns remain about weak same-store sales growth [7] - The current weak traffic to Chipotle locations poses a risk to both revenue potential and profit margins, which could adversely affect earnings per share growth [7][8]