Chipotle Mexican Grill (CMG 1.76%) is an iconic national restaurant brand that helped invent the concept of "fast casual." But the purveyor of burritos, burrito bowls, tacos, and other freshly prepared Mexican dishes is in a slump.
Chipotle's stock price is down 37% in 2025, and down about 45% from its all-time high as the year winds down. The company recently lowered its guidance for 2025, saying that it expects to see a small decline in same-store sales this year.
But the news for Chipotle shareholders is not all bad. Here's a closer look at Chipotle's place in the restaurant industry landscape -- and a few good reasons why you might want to buy the dip on Chipotle.
Americans cut back on restaurant meals in 2025
With high inflation and recent rising unemployment, many Americans are being more frugal about restaurant meals and other consumer discretionary spending. Others are deciding not to go to restaurants at all. The National Restaurant Association found that, as of October 2025, restaurants had reported nine months in a row of net declines in customer traffic compared to the same month in the previous year.
Image source: Getty Images.
Signs of price-sensitivity might be strongest among fast-casual diners. Instead of eagerly trading up for what they perceive to be higher-quality food and a premium experience, more customers are grumbling about having to shell out $15-$20 for a fast-casual "slop bowl" of choose-your-own ingredients.
Chipotle's best customers are struggling
On its most recent quarterly earnings call on Oct. 29, Chipotle said that customers with household incomes below $100,000 make up 40% of the company's total sales and that this group is "dining out less often due to concerns about economy and inflation." Management noted that customers aged 25-35 are "particularly challenged."
Said CEO Scott Boatwright: "This group is facing several headwinds including unemployment, increased student loan repayment and slower real wage growth. We tend to skew younger and slightly over-indexed to this group relative to the broader restaurant industry."
It makes sense that when people are feeling financial stress, they're less likely to splurge on a premium fast-casual burrito.
NYSE: CMG
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How Chipotle can turn things around in 2026
So how can Chipotle find a better path forward in a challenging environment for restaurants? The company's management team has announced a few ideas that show promise for growth in 2026:
Opening hundreds of new stores
Chipotle plans to open 350-370 new restaurant locations in 2026 -- about one new Chipotle every day. The company has 4,000 existing stores, so that means the company plans to boost its footprint by about 9% in 2026.
This expansion should be good for Chipotle's future profits, since new Chipotle restaurants start delivering positive results quickly. The company says its new-store productivity rate is 80%. That means during its first year in business, a newly opened restaurant makes 80% of the sales of an average existing restaurant. High productivity for new restaurants is a sign that Chipotle is choosing good locations where there is strong demand, and that the company is operating its new stores effectively.
Refreshing the Chipotle menu
It's unfair to call Chipotle food a "slop bowl." The company prides itself on serving fresh, "real" food with wholesome ingredients and responsible sourcing. But the restaurant menu could use a refresh. And Boatwright has a plan for menu innovation.
Chipotle research shows that 90% of Gen Z consumers -- those roughly age 13 to 28 -- "would visit a restaurant just for a new sauce." In an effort to win back younger customers who seek new flavors, Chipotle has recently launched adobo ranch dip and chimichurri chili sauce. The company said these new items were successful in driving incremental increases in transactions.
Chipotle is also planning to launch new protein items as limited-time offers. On Dec. 23, Chipotle rolled out its first-ever high-protein menu, with price points starting at $3.50 for a chicken taco. This strategy could appeal to price-conscious customers who want more nutritional value for their money.
Chipotle stock might be cheap
No matter how you feel about the price of a burrito bowl, there is strong evidence to suggest that Chipotle is an undervalued stock for 2026. Chipotle's price-to-earnings ratio is around 33. That's significantly below where it was five years ago, so it's clear investors in the past have been willing to pay more. And if Chipotle can get through this difficult stretch, its shares might soar again.
Chipotle is still facing a few challenges and risks. If inflation stays high and the job market gets weaker, Chipotle's best customers might stay away and save money by cooking at home. But if the company can refresh its menu and adapt to changing consumer preferences, Chipotle could be a great stock to buy in 2026.
