Why did Chipotle's revenue grow while same-store sales declined?

Revenue growth came mainly from new restaurant openings (334 company-owned in 2025, a record). Comparable restaurant sales, which measure mature locations, fell 1.7% for the year as transactions dropped 2.9%, partly offset by a 1.2% increase in average check.

What drove the margin compression in 2025?

Restaurant-level margin fell 130 basis points to 25.4%. Labor rose to 25.1% of revenue from 24.7% due to lower sales volumes and wage inflation. Other operating costs also rose to 14.7% of revenue from 13.9%, and food costs were partly offset by menu price increases. Beef, chicken, and tariff inflation also pressured costs.

Is the adjusted EPS growth high quality?

Partly. Full-year adjusted EPS rose 4.5% to $1.17, but the result benefited from lower G&A (down $35.6 million GAAP), a 2.5% reduction in weighted diluted shares from buybacks, and a lower tax rate. Q4 adjusted EPS was flat, suggesting underlying profit growth slowed late in the year.

What should investors expect for 2026?

Management guides to roughly flat comparable restaurant sales, 350 to 370 new openings, about 80% of company-owned restaurants with Chipotlanes, and an underlying tax rate of 24% to 26%. Flat comps imply that growth will again depend heavily on new unit openings, and the company has not provided EPS guidance in this release.

How is the balance sheet and capital allocation changing?

Cash and equivalents fell to $351 million from $749 million, and total shareholders' equity fell to $2.83 billion from $3.66 billion, largely due to $2.4 billion of buybacks that exceeded free cash flow. Operating lease liabilities rose to about $5.1 billion. Investors should watch whether the company keeps buybacks at this pace while transactions are declining.

CMG 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed February 3, 2026. Cited figures are marked; the original filing is the authoritative source.

Chipotle (CMG) closed fiscal 2025 with total revenue up 5.4% to $11.9 billion^a, driven mainly by new restaurant openings (334 company-owned openings, a record).

However, underlying demand weakened: full-year comparable restaurant sales fell 1.7%^b (transactions down 2.9%, partly offset by a 1.2% average check increase), and Q4 comps fell 2.5% with transactions down 3.2%. Profitability compressed as well. Full-year GAAP operating margin declined to 16.2% from 16.9%, restaurant-level margin fell to 25.4% from 26.7%, and labor costs rose to 25.1% of revenue on lower volumes and wage inflation.

GAAP diluted EPS rose 2.7% to $1.14^c and adjusted EPS rose 4.5% to $1.17, but the Q4 adjusted EPS gain was flat at $0.25, and part of the growth came from lower G&A and a share count reduced by heavy buybacks rather than from operating momentum. management launched a five-pillar "Recipe for Growth" strategy aimed at restoring transaction growth through operational excellence, menu innovation (including a high-protein menu), a relaunched Rewards program, AI and technology, global expansion, and talent. Management guided 2026 to roughly flat comparable restaurant sales, 350 to 370 new openings, about 80% of company-owned restaurants with Chipotlanes, and an underlying tax rate of 24% to 26%. The company repurchased $2.4 billion of stock in 2025 and has $1.7 billion remaining under authorization, though cash fell to $351 million and total shareholders' equity dropped to about $2.8 billion from $3.7 billion, largely reflecting buybacks and a retained earnings decline.

Investors will focus on whether the strategy can reverse traffic declines, since the 2026 guidance implies continued reliance on new unit growth. This 8-K furnishes the earnings press release (Exhibit 99.1) under Item 2.02. The full-year 2025 Form 10-K is expected in early February 2026, and the company is hosting a 4:30 pm ET conference call on February 3, 2026.

02—Key points

Key Highlights

Full-year 2025 total revenue rose 5.4% to $11.9 billion, but comparable restaurant sales fell 1.7%, with transactions down 2.9%, signaling weaker traffic despite growth from new units.
Restaurant-level operating margin fell to 25.4% from 26.7%, and GAAP operating margin fell to 16.2% from 16.9%, as labor deleveraged to 25.1% of revenue.
Q4 2025 comparable sales declined 2.5% with transactions down 3.2%; Q4 GAAP EPS of $0.25 rose 4.2%, but adjusted EPS was flat.
Full-year GAAP diluted EPS was $1.14 (+2.7%) and adjusted diluted EPS was $1.17 (+4.5%); adjusted results exclude a $27.9 million stock-based compensation forfeiture reversal and $34.8 million in retention grants.
Management launched the 'Recipe for Growth' strategy with five pillars focused on transactions, menu innovation, a relaunched Rewards program, AI-enabled technology, global expansion, and talent.
2026 outlook calls for roughly flat comparable sales, 350-370 new openings (including 10-15 international partner-operated), and an underlying tax rate of 24-26%.
Capital returns remained heavy: $2.4 billion of buybacks in 2025 at an average price of $42.54, with $1.7 billion still authorized, while cash declined to $351 million and shareholders' equity fell to $2.8 billion.

03—Questions

Frequently Asked Questions

Why did Chipotle's revenue grow while same-store sales declined?
Revenue growth came mainly from new restaurant openings (334 company-owned in 2025, a record). Comparable restaurant sales, which measure mature locations, fell 1.7% for the year as transactions dropped 2.9%, partly offset by a 1.2% increase in average check.
What drove the margin compression in 2025?
Restaurant-level margin fell 130 basis points to 25.4%. Labor rose to 25.1% of revenue from 24.7% due to lower sales volumes and wage inflation. Other operating costs also rose to 14.7% of revenue from 13.9%, and food costs were partly offset by menu price increases. Beef, chicken, and tariff inflation also pressured costs.
Is the adjusted EPS growth high quality?
Partly. Full-year adjusted EPS rose 4.5% to $1.17, but the result benefited from lower G&A (down $35.6 million GAAP), a 2.5% reduction in weighted diluted shares from buybacks, and a lower tax rate. Q4 adjusted EPS was flat, suggesting underlying profit growth slowed late in the year.
What should investors expect for 2026?
Management guides to roughly flat comparable restaurant sales, 350 to 370 new openings, about 80% of company-owned restaurants with Chipotlanes, and an underlying tax rate of 24% to 26%. Flat comps imply that growth will again depend heavily on new unit openings, and the company has not provided EPS guidance in this release.
How is the balance sheet and capital allocation changing?
Cash and equivalents fell to $351 million from $749 million, and total shareholders' equity fell to $2.83 billion from $3.66 billion, largely due to $2.4 billion of buybacks that exceeded free cash flow. Operating lease liabilities rose to about $5.1 billion. Investors should watch whether the company keeps buybacks at this pace while transactions are declining.

04—Continue

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