You’ve probably seen the headlines or noticed your portfolio took a hit. Chipotle (CMG) used to be the "golden child" of the stock market, basically untouchable for years. But lately? It’s been a bit of a mess.
If you’re wondering why is chipotle stock down, you aren’t alone. Just a year or so ago, this stock was hitting record highs, fueled by a 50-for-1 stock split that had everyone talking. Fast forward to January 2026, and the vibe is completely different. Shares have plummeted nearly 40% from their peak.
Honestly, it isn't just one thing. It’s a mix of a "messy breakup" with a star CEO, people getting grumpy about burrito sizes, and a consumer who is finally starting to say "no thanks" to a $15 lunch.
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The Brian Niccol Exit: A Tough Pill to Swallow
Let's be real—Wall Street loved Brian Niccol. He was the guy who took Chipotle from "E. coli disaster" to "digital juggernaut." When he jumped ship in late 2024 to save Starbucks, it felt like a gut punch.
Investors hate uncertainty. Even though Scott Boatwright (the new CEO) is a seasoned pro who helped build the current playbook, the market is skeptical. It’s that "can the replacement ever be as good as the original?" anxiety.
The "Skimping" Controversy and Margin Pain
You’ve seen the TikToks. People filming workers putting three pieces of chicken in a bowl. It sounds silly, but "portion-gate" actually cost the company real money.
To fix the PR nightmare, Chipotle had to start being more generous with their scoops. That sounds great for your lunch, but it’s rough for the bottom line. In late 2025, the company reported that restaurant-level operating margins dropped to 24.5%, down from 25.5% the year before.
When you combine "more chicken in every bowl" with the rising cost of beef and labor, the math starts to look a lot less attractive to big-money investors.
Why is Chipotle Stock Down? Look at the Tired Consumer
For a long time, Chipotle seemed recession-proof. It didn't matter if prices went up; people still wanted their bowls. But 2025 was the year the "exhausted consumer" finally showed up.
- Negative Sales Growth: For parts of 2025, same-store sales actually turned negative.
- Trading Down: People who used to grab a burrito twice a week are now eating at home or looking for cheaper "value meals" at fast-food joints.
- Transaction Slump: In the third quarter of 2025, transactions (actual foot traffic) dropped by 0.8%.
Basically, the "check size" went up because of price hikes, but fewer people were actually walking through the door.
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Valuation: The Price of Perfection
Chipotle has always traded at a massive premium. For years, its Price-to-Earnings (P/E) ratio was hovering in the 50s, 60s, or even 80s.
When a stock is priced for perfection, even a tiny "miss" feels like a disaster. Right now, the stock is trading at a P/E of around 34. While that's "cheap" for Chipotle historically, it’s still way more expensive than the average restaurant stock, which usually sits closer to 20.
Is There a Light at the End of the Burrito Tunnel?
It isn't all gloom. Management just reaffirmed their 2025 guidance and they're talking big about 2026.
They plan to open 350 to 370 new restaurants this year. They're also leaning hard into "Chipotlanes" (drive-thrus) and automation, like those robotic avocado cutters that are supposed to speed things up.
But for the stock to really recover, we need to see people come back. If the company can't get transaction growth back into the positive by mid-2026, that $40 price point might become the new normal rather than a "dip" to buy.
What You Should Keep an Eye On
If you're holding the stock or thinking about jumping in, watch these specific signals over the next few months.
First, keep a close watch on the February 3, 2026, earnings call. This is where management will lay out the official roadmap for the rest of the year. If they don't forecast mid-single-digit sales growth, the market might punish them again.
Second, watch the labor and food costs. If inflation continues to bite, Chipotle has limited room to raise prices again without scaring off even more customers. They are currently stuck in a "wait and see" period where the brand's strength is being tested against a very picky consumer.
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Keep your expectations grounded. The days of 800% gains in a few years might be over, but as a stabilizing business with no debt and 4,000 locations, the fundamentals aren't broken—they're just recalibrating to a world where a burrito is no longer a cheap thrill.