After a challenging but revealing 2025, Chipotle Mexican Grill (CMG +1.77%) enters 2026 with its long-term investment case largely intact. The brand remains strong, execution has held up, and unit expansion continues at an attractive pace.
But for investors, the following year isn't about brand strength alone. It's about navigating two very real risks that could shape returns in the near to medium term.
Image source: Getty Images.
Traffic recovery isn't a given
The most important variable for Chipotle in 2026 is customer traffic.
In 2025, same-store sales softened primarily because consumers visited less frequently, not because prices collapsed or because the brand lost relevance. That distinction matters, but it doesn't eliminate risk. For perspective, comparable restaurant sales were largely neutral at 0.3% growth year over year.
Chipotle's valuation still assumes a return to positive same-store sales growth. So if people continue to pull back on discretionary dining, Chipotle could face another year of flat or declining transactions. This, in turn, could put pressure on its valuation.
The increasingly value-driven competitive landscape further amplifies this risk. Many restaurant chains are leaning into discounts, bundles, and aggressive promotions to defend traffic. Chipotle has intentionally avoided heavy discounting to protect brand equity -- a smart long-term choice, but one that could pressure near-term traffic if consumers trade down.
For investors, the signal to watch in 2026 isn't average ticket size. It's visit frequency. Without a clear traffic inflection, the stock's multiple is unlikely to expand, even if the business remains fundamentally sound.
Margin pressure could linger longer than expected
The second significant risk is profitability.
Chipotle entered 2026 after a year of margin compression driven by higher food and labor costs -- and by management's decision to absorb some of that inflation, rather than pass it fully to customers. In the third quarter of 2025, operating margin fell 1%, from 16.9% a year ago to 15.9%, reflecting the challenges the company faced.
That strategy protected the brand in 2025, but it creates uncertainty going forward.
If food costs (particularly protein costs) remain volatile or labor costs remain elevated, Chipotle may face difficult trade-offs. Raising prices too aggressively risks further pressuring traffic. Holding prices steady could weigh on margins and earnings growth.
Digital sales add another layer of complexity. While digital ordering improves convenience and loyalty, it also carries higher fulfillment costs. Unless offset by efficiency gains or pricing adjustments, a high digital mix can constrain restaurant-level margins.
For investors, margin trajectory matters because it directly affects free cash flow and return on invested capital -- two pillars of Chipotle's long-term valuation.
NYSE: CMG
Key Data Points
What does it mean for investors?
Chipotle's risks in 2026 aren't existential. They're cyclical and execution-based. But they matter.
Traffic trends will determine whether growth reaccelerates. Margins will determine how resilient earnings remain if growth takes longer to return. Together, these factors will shape whether Chipotle stock rewards patience or tests it.
For long-term investors, monitoring these two risks closely will be paramount in 2026.
