Shares of Chipotle (CMG +0.29%) fell 38.6% last year, according to data from S&P Global Market Intelligence. The fast-casual leader in Mexican food had poor traffic and sales figures last calendar year, leading investors to sell the stock. With over 4,000 locations in North America, there are worries that the brand is facing market saturation, which will inhibit growth in the coming years.
This is why Chipotle stock fell in 2025. But is it a buy-the-dip candidate for 2026?
NYSE: CMG
Key Data Points
Slowing same-store sales and declining margins
For years, investors could bet on steady growth at Chipotle. It would open new stores and grow revenue at existing locations, fueling cumulative revenue growth of 178% over the last 10 years.
In 2025, the company kept opening new locations. However, it saw a sharp reversal in its revenue growth at existing locations, otherwise known as same-store sales growth. For the first three quarters of 2025, same-store sales growth was 0%, 4%, and 0% for Chipotle compared to 2024, which is well below the rate of inflation on input costs for restaurants.
This is an important balance for a successful restaurant to have. If input costs (labor and food) are growing faster than your same-store sales, profit margin will go down. We saw this happen with Chipotle, where operating margin fell to 16.4% over the last twelve months, down from a high of 17%. If same-store sales growth remains weak, Chipotle's operating margin will continue to compress.
Image source: Getty Images.
Buy the dip on Chipotle stock?
In 2026, Chipotle's share price has begun to recover. It is up 8.5% year-to-date (YTD). Looking at the stock's valuation, it has a price-to-earnings ratio (P/E) of 36, which is lower than Chipotle's average historical earnings multiple but higher than the current S&P 500 average of 31.
Despite the stock's drawdown, Chipotle does not look cheap right now. It should be able to slowly grow its store count in North America while exploring new markets around the globe, such as Europe, the Middle East, and Mexico (where it is planning its first location), but the key worry is same-store sales growth. Traffic to Chipotle locations is weak right now, with no signs of a reversal. This is a concern because weak same-store sales growth will not only hurt Chipotle's revenue potential but also impact its profit margin, a double-whammy to earnings per share (EPS) growth.
Stay away from Chipotle stock, for now. It still looks expensive.
