Core Insights - Chipotle Mexican Grill, Inc. (CMG) is set to accelerate its unit expansion with plans for 350-370 new restaurant openings in 2026, significantly higher than the 140 restaurants opened in 2019 [1][7] - Investor concerns are shifting towards the impact of new units on comparable sales and potential cannibalization risks as the pace of expansion increases [1] Expansion and Sales Performance - In Q3 2025, new restaurant openings contributed approximately a 100-basis-point headwind to reported comparable sales, consistent with historical trends [2] - The impact on comparable sales is attributed to the pace of unit expansion rather than a decline in existing restaurant performance [2] - New restaurants are showing strong early economics, with first-year sales productivity near 80% and year-two cash-on-cash returns around 60% [2][7] Cannibalization and Recovery - Cannibalized restaurants typically recover within 12 to 13 months, with this recovery timeline remaining stable despite increased development pace [3] - Per-store cannibalization metrics have not worsened compared to previous years, indicating that new supply is being absorbed without significant disruption to existing locations [3] Long-term Goals and Market Conditions - Chipotle aims for a long-term goal of 7,000 restaurants in North America, with expectations that the impact of new openings on comparable sales may lessen over time as unit growth stabilizes [4] - While macro-driven traffic pressures are a near-term concern, consistent unit-level economics and stable recovery patterns support the company's long-term operating model [4] Stock Performance and Valuation - CMG shares have decreased by 33.2% over the past year, contrasting with a 6% decline in the industry [5] - The company trades at a forward price-to-sales (P/S) multiple of 3.91, above the industry average of 3.47, while competitors like Starbucks, Sweetgreen, and CAVA have P/S multiples of 2.60, 1.15, and 5.48, respectively [8] Earnings Projections - The Zacks Consensus Estimate for CMG's 2026 earnings per share has declined over the past 60 days, with projections indicating a 4.7% rise in 2026 [11][12] - In comparison, industry players like Sweetgreen and CAVA are expected to see earnings increases of 15.5% and 10.9%, respectively, while Starbucks is projected to rise by 9.4% [12]