How Chipotle lost its sizzle

Chipotle Mexican Grill, the Newport Beach-based chain known for its bursting burritos and lunch bowls, just finished its worst year ever.

Its same-store sales declined last year for the first time since its IPO two decades ago. The slowdown reflects what analysts see as a broader slowdown in fast-food chains — seen as a step above fast food but below full-service restaurants.

In a K-shaped economy where the wealthy few are still spending while everyone else worries about rising prices and keeping their jobs, Chipotle is stuck in a sour situation. This is not a destination for the rich. Instead, it’s a skippable splurge for those looking to save.

“Our guests [are] with a greater emphasis on value and quality and reducing overall restaurant spending,” Chipotle Chief Executive Officer Scott Boatwright said last week after the results were announced.

In an uncertain economy muddled by tariffs and immigration crackdowns, consumers are cutting back on discretionary spending and increasingly seeking the best value for essentials such as lunch and dinner.

Chipotle has grown in popularity since opening in Denver in 1993. It moved its headquarters to California in 2018.

The burrito staple opened 334 new locations last year, bringing its total to about 4,000. The company’s net income was $1.5 billion in 2025, virtually flat with the previous year. Its comparable sales have lost strength with a decline of around 2% in 2025 after an increase of 7.4% in 2024.

In an earnings conference call earlier this month, executives estimated that same-store sales would remain nearly flat in 2026 as 350 to 370 new restaurants open.

“As we approach 2026, the consumer landscape is changing,” Boatwright said.

He tried to suggest that Chipotle’s customers belong to the ascending K part of the K-shaped economy, and so he doesn’t plan big price cuts to attract new customers. Boatwright said during the earnings conference call that 60% of Chipotle’s top customers make more than $100,000 a year.

“We’ve learned that the customers are younger, with a little higher income, and we’re going to lean into that,” Boatwright said.

The company’s suggestion that it doesn’t plan to do much more for cost-conscious consumers has sparked an online debate that the burrito giant is no longer for everyday people.

McDonald’s has demonstrated the value of offering more value these days. It announced this week that its sales jumped after the launch of its $5 meal deal last year, part of a broader war for values ​​among fast-food joints.

Chipotle has tried to offer value by not raising its prices as much as inflation would require, relaunching a rewards program, testing a “happier hour” with lower prices, and offering smaller portions at lower prices.

Chipotle came under fire in 2024 for handing out inconsistent portions, but has since recommitted to giving every customer a “generous” handout.

Late last year, Chipotle launched a high-protein menu that included inexpensive options like a chicken cup or steak for around $4. Protein has been trending as rising GLP-1 has caused many Americans to eat less and focus on getting the most out of their meals.

“This is going to be a landmark year for Chipotle to get back on track,” said Jim Salera, restaurant analyst at Stephens. “Chipotle has traditionally been much more resilient to the ebbs and flows of the consumer, but no one is immune.”

The company has overcome other challenges in the past. Its business took a hit when it served tainted food that sickened more than 1,100 people in the United States between 2015 and 2018. The company paid a $25 million fine to resolve criminal charges related to the outbreaks.

Some full-service restaurants are also lowering their prices to levels that compete with Chipotle, analysts say. A Chipotle burrito or bowl and drink costs about $15, while value-oriented full-service restaurant Chili’s offers a multi-course meal for less than $11.

“Fast casual’s pricing advantage over other segments has eroded significantly,” said Aneurin Canham-Clyne, who covers restaurants for trade publication Restaurant Dive.

Middle- and upper-income consumers ages 25 to 30 make up a significant portion of Chipotle’s business, but many are looking for cheaper ways to get their meals. Fast-food chains need to tap into consumers of varying incomes, not just the top 20% of households, Canham-Clyne said.

“White-collar workers earning less than six figures in big cities who are feeling the heat of service inflation or who feel insecure in their jobs because of AI, are going to save a little more money,” he said.

Chipotle shares have fallen more than 37% over the past year, and it’s not the only fast casual company struggling in the stock market. Sweetgreen, headquartered in Los Angeles and aimed at a health-conscious Southern California consumer, has seen its shares fall 80% over the past year. Mediterranean bowl spot Cava saw its shares fall more than 50% over the same period.

Chipotle stock closed Thursday at $35.84, down 4% for the day.

Canham-Clyne said Chipotle is not in dire straits yet. The brand has a proven track record of success among those looking for high-quality meals at a lower price than most table service restaurants.

“They sell a lot of burritos and have a lot of stores,” Canham-Clyne said. “They can survive a slight downturn and continue to grow.”