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By Brian Nelson, CFA
Chipotle Mexican Grill (CMG) recently reported fourth quarter results that were better than consensus forecasts on both the top and bottom lines. Total revenue increased 4.9% but the pace of growth was weighed down by a 2.5% decrease in comparable restaurant sales. Its operating margin in the fourth quarter was 14.1%, declining from 14.6% year-over-year. Restaurant level operating margin also fell 140 basis points, to 23.4%, in the quarter. Diluted earnings per share increased 4.2%, while adjusted diluted earnings per share remained flat at $0.25. During the quarter, Chipotle opened 132 company-owned restaurants, with 97 locations including a Chipotlane, and seven international partner-operated restaurants.
Management had the following to say about the results:
Through our proven business model, prudent investments in operational excellence and the support of a strong balance sheet, 2025 was a year of progress and resilience for Chipotle. Against a dynamic consumer backdrop, we opened a record number of restaurants globally and grew Q4 and full year revenue. This momentum will fuel our next phase of growth, driven by our ‘Recipe for Growth’ strategy which leans into what uniquely differentiates our brand to accelerate transactions and expand our footprint globally.
During the fourth quarter, food, beverage and packaging costs fell to 30.2% of total revenue, a decrease from 30.4% in the fourth quarter of 2024. Menu price increases, lower dairy costs, and cost of sales efficiencies helped with profitability, while beef and chicken inflation and tariffs were headwinds. Labor costs in the fourth quarter were 25.5% of total revenue, up from 25.2% in the fourth quarter of last year, due to wage inflation. Adjusted net income was $331.3 million, or $0.25 per adjusted diluted share, in the quarter, compared to $340.0 million, or $0.25 per adjusted diluted share, in the fourth quarter of 2024.
Chipotle’s “Recipe for Growth” strategy encapsulates five key areas:
Protect and strengthen the core by driving operational and culinary excellence to deliver exceptional value for our guests;
Evolve the brand messaging and accelerate menu innovation and new occasions that drive demand into our restaurants;
Modernize our business model with industry-leading technology, including leveraging AI and relaunching our Rewards Program, to elevate the experience for our guests and teams;
Expand our global reach by scaling with intention through proven, company-owned and partner-operated markets, as well as strategic new regions; and
Cultivate the best talent in the industry that is energized and focused on speed and agility.
For 2026, Chipotle expects comparable restaurant sales to be about flat, as it plans to open 350-370 net new restaurants, which includes about 10-15 international partner-operated restaurants. Approximately 80% of company-owned restaurants will have a Chipotlane. As of December 31, 2025, there were a total of 4,056 Chipotle restaurants, including 14 international partner-operated restaurants. Management remains confident in achieving 7,000 restaurants in North America alone. We continue to like Chipotle’s long-term promise, and the stock remains a holding in the Best Ideas Newsletter portfolio.
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Brian Nelson owns shares in SPY, SCHG, QQQ, QQQM, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, QQQM, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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