Chipotle Mexican Grill, the Newport Beach-based chain known for its hearty burritos and lunch plates, just wrapped up the worst year in its history.
Its comparable sales declined last year for the first time since it went public two decades ago. The slowdown reflects what analysts say is a broader slowdown in fast-casual chains, considered a step above fast food but below full-service restaurants.
In a K-shaped economy, where the few with money continue to spend while everyone else is anxious about rising prices and keeping their jobs, Chipotle is caught in a difficult situation. It is not a destination for the rich. Instead, it's a splurge that those looking to save can skip.
“Our guests [are] placing greater emphasis on value and quality and reducing overall restaurant spending,” Chipotle CEO Scott Boatwright said last week after announcing earnings.
In an uncertain economy roiled by tariffs and immigration crackdowns, consumers are cutting back on discretionary spending and increasingly looking for the best value on staples like 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 unchanged from the previous year. Its comparable sales lost steam with a decrease of approximately 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 broadly flat in 2026, with between 350 and 370 new restaurants opening.
“As we approach the year 2026, the consumer landscape is changing,” Boatwright said.
He tried to suggest that Chipotle's customers come from the upward-sloping part of the K-shaped economy, so it won't plan big price cuts to attract new customers. Boatwright said on the earnings call that 60% of Chipotle's top customers earn more than $100,000 a year.
“We've learned that guests are younger and a little bit higher income, and we'll lean into that,” Boatwright said.
The company's suggestion that it doesn't plan to do much more for cost-conscious consumers sparked an online debate that the burrito giant is no longer for everyday people.
McDonald's demonstrated the value of offering more value these days. It announced this week that its sales increased after launching its $5 meal deal last year, part of broader value wars among fast-food establishments.
Chipotle has tried to offer value by not raising its prices as much as inflation would require, reviving a rewards program, testing a “happy hour” with lower prices and offering smaller portions at lower prices.
Chipotle came under fire in 2024 for serving inconsistent portion sizes, but has since recommitted to providing each customer with a “generous” portion.
Late last year, Chipotle launched a protein-rich menu that includes budget-friendly options like a cup of chicken or steak for about $4. Protein has been all the rage as rising GLP-1 causes many Americans to eat less and focus on getting the most out of their meals.
“This will be a make or break year for Chipotle to get back on track,” said Jim Salera, a restaurant analyst at Stephens. “Chipotle has traditionally been much more resilient to consumer ups and downs, but no one is immune.”
The company has overcome other challenges in the past. Its business suffered when it served contaminated food that sickened more than 1,100 people in the U.S. 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 prices to levels that compete with Chipotle, analysts said. A Chipotle burrito or bowl plus a drink costs about $15, while value-focused full-service restaurant Chili's offers a multi-course meal for under $11.
“The pricing advantage that fast casual has relative to other segments has eroded significantly,” said Aneurin Canham-Clyne, who covers restaurants for the 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 more affordable ways to get their meals. Fast-casual chains have to rely on consumers with a variety of incomes, not just the top 20% of households, Canham-Clyne said.
“White-collar workers who earn just six figures in major cities and who are feeling the pressure of utility inflation or feel insecure in their jobs as a result of AI, are going to save a little more money,” he said.
Chipotle stock has fallen more than 37% over the past year, and it's not the only informal company struggling on the stock market. Los Angeles-based Sweetgreen, which serves a health-conscious Southern California consumer, saw its stock drop 80% over the past year. Shares in Mediterranean spot Cava fell more than 50% during the same time period.
Chipotle shares closed Thursday at $35.84, down 4% on the day.
Canham-Clyne said Chipotle is not in dire straits yet. The brand has proven to be consistent and attractive to those looking for high-quality meals at a lower price than most restaurants.
“They sell a lot of burritos and they have a lot of stores,” Canham-Clyne said. “They can survive a small recession and continue to grow.”
