Chipotle Stock Slumps 25% in a Month: Has the Free-Fall Ended?

Chipotle Mexican Grill, Inc. CMG stock has slipped roughly 25% over the past month, as investors reacted to signs of slowing traffic, particularly among younger and lower-income consumers. 

In the same time frame, the industry and the S&P 500 have declined 0.3% and gained 1.3%, respectively. Shares of other industry players like Darden Restaurants, Inc. DRI and CAVA Group, Inc. CAVA have declined 5.5% and 26.2%, respectively and Restaurant Brands International Inc. QSR gained 1.3%.

Price Performance

The company reported only a 0.3% increase in comparable sales in third-quarter 2025, reflecting a notable decline in transactions as household budgets tightened and dining-out frequency decreased among customers earning less than $100,000 annually. Management also highlighted pressure within the 25-35 age cohort, a group that historically represents a sizable share of Chipotle’s customer base. This backdrop, combined with the decision not to aggressively raise menu prices in the near term, has weighed on sentiment and contributed to the stock’s recent correction.

Yet, despite these challenges, Chipotle’s core fundamentals and long-term growth story remain intact. The company continues to post healthy new-unit economics, maintain strong brand relevance and invest in menu innovation and digital loyalty engagement. While the near-term outlook remains cautious, management believes transaction trends can improve as operational and marketing initiatives take hold. The key question for investors now is whether the recent stock pullback has reset expectations enough to create a buying opportunity.

Recent Concerns Weighing on Momentum

Chipotle’s weaker traffic trends stem largely from macro-driven consumer pressures rather than a loss of brand relevance. Management noted that lower and some middle-income households have reduced restaurant visits, choosing food-at-home options to stretch budgets. This impacted Chipotle more than some peers because it over-indexes to younger guests who currently face higher unemployment and resumed student loan payments.

Another factor is the intensifying value-focused promotional environment across the industry. While many restaurant chains pursued aggressive discounts to drive visits, Chipotle reiterated that deep discounting is not part of its long-term strategy, preferring to maintain product quality and protect brand equity. However, that approach has required the company to be more precise in communicating the value of its offering rather than simply lowering prices.

Finally, operational inconsistencies, especially involving digital order accuracy, emerged in internal customer feedback data. While these issues are not widespread, management acknowledged the need to increase consistency across all 4,000 restaurants.

How Chipotle Plans to Address These Issues

Chipotle is implementing system-wide retraining and adjusting bonus incentives to emphasize digital accuracy and in-restaurant experience. Additionally, rollout of the high-efficiency equipment package (dual-sided planchas, upgraded prep systems) is showing improvements in speed, consistency and kitchen workflow in early test markets. 

The company will accelerate its pace of limited-time offerings in 2026, including new proteins and sauces, building on the strong engagement seen with Adobo Ranch and Red Chimichurri. Customer research shows that menu innovation drives repeat visits and increases spending over the following year. 

The company is enhancing its rewards program, expanding gamified promotions and Chipotle U to deepen loyalty among younger customers. Early testing indicates these programs reactivate infrequent customers and lift transaction frequency.

Chipotle Estimate Revision

Estimates for CMG’s 2025 earnings have moved down from $1.19 to $1.17 in the past seven days. The company’s earnings in 2025 are likely to witness year-over-year growth of 4.5%. Then again, Darden Restaurants, Restaurant Brands and CAVA’s earnings for the current year are likely to witness year-over-year increases of 11.1%, 9.9% and 26.2%, respectively.

CMG’s Valuation

From the valuation point of view, the stock is still trading at a premium despite the recent decline. Chipotle’s forward 12-month price-to-earnings ratio stands at 24.69, higher than the industry’s 23.15 and the S&P 500's 23.47.

P/E (F12M)

Wrapping Up

Chipotle’s recent pullback reflects more than just market volatility — this highlights meaningful pressure on its core customer base, slowing traffic trends and a consumer environment that is still working against the brand. 

While management is taking steps to improve operations, enhance digital engagement and reinvigorate menu excitement, these initiatives will take time to materially lift transactions. Meanwhile, the stock continues to trade at a premium relative to peers despite softer near-term growth expectations and rising competitive intensity within fast casual dining. With value perception challenges, a cautious pricing stance that may constrain margins and no clear signal yet of a sustained rebound in demand, investors may be better served waiting for signs of stabilization before considering new positions in the stock.

CMG currently has a Zacks Rank #4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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