Chipotle revenue rises 9.6% to $3.3 billion as earnings and operating margins fall

Key Facts

Chipotle Mexican Grill reported a 9.6% rise in third-quarter 2026 revenue to $3.3 billion from the same period a year earlier, driven mainly by new restaurant openings and then by comparable sales growth. Comparable restaurant sales rose 2.1%, with a 1.3% increase in the average check and 0.8% growth in transactions. But stronger revenue and sales did not prevent earnings and margins from falling, as diluted EPS declined 6.9% to $0.27 from $0.29 a year earlier. In an initial reaction, the stock rose 7% in premarket trading on Thursday, October 29, Reuters reported. The report linked the move to signs that the company’s efforts to restore customer traffic through new products and a marketing campaign were improving.

The results showed comparable sales growth holding near the previous quarter’s pace, after reaching 2.2% in the second quarter, but clearly exceeding the 0.5% increase in the first quarter. CEO Scott Boatwright said the company had delivered three consecutive quarters of positive comparable restaurant transaction growth, adding that it “demonstrates the success of our recipe for growth strategy.” Transactions rose 0.8% in the third quarter, while a 1.3% increase in the average check helped lift comparable sales growth to 2.1%. Digital sales accounted for 38.8% of food and beverage revenue, compared with 36.7% in the third quarter of 2025. The company opened 84 company-owned restaurants during the quarter, along with five restaurants operated by international partners, an expansion that contributed to overall revenue growth.

By contrast, operating margins at both the company and restaurant levels declined. The operating margin fell to 13.7% from 15.9% a year earlier, while the restaurant operating margin dropped to 23.3% from 24.5%. Labor costs rose to 25.7% of revenue, compared with 25.2% in the same period of 2025. The company attributed this to lower sales volumes, employee compensation, additional labor and higher insurance costs. Food, beverage and packaging costs were 29.5% of revenue, down from 30% a year earlier, despite pressure from beef price inflation, freight and higher protein usage. The company said these factors partly offset the effects of price increases and tariff relief.

Margin pressure has extended through previous quarters, despite an improvement in comparable sales growth during the year. In the first quarter, revenue rose 7.4% to $3.1 billion and comparable sales grew 0.5%, while the operating margin was 12.9%, compared with 16.7% a year earlier. In the second quarter, revenue increased 9.3% to $3.3 billion and comparable sales rose 2.2%, but the operating margin fell to 15.7% from 18.2%. This trajectory places the third-quarter results between an improvement in comparable sales from the start of the year and continued year-over-year margin contraction. TD Cowen analyst Andrew Charles said his firm “underestimated Chipotle’s willingness to sacrifice margin and invest in marketing to drive comparable sales.”

Despite the stock’s rise in premarket trading, Reuters reported that at least four brokerages cut their price targets after the results. Analysts focused on the trade-off between winning back customers and protecting profitability, as supporting sales requires marketing spending and may pressure margins. Jefferies analysts said signs of customer traffic stabilizing were beginning to emerge, but “a more challenging macroeconomic environment could delay a meaningful sales recovery.” The company’s stock closed at $28.73 on October 28, according to EL7 data. The stock’s rise alongside price target cuts reflects differing market views of improving traffic indicators on one hand and continued profitability concerns on the other.

Management expects fourth-quarter comparable sales to rise about 3% to 4%, versus a 2.1% increase in the three months ended in September. The company maintained its 2026 outlook for comparable sales growth in the low single digits, with plans to open 350 to 370 new restaurants. To support demand and address meat and freight costs, Chipotle will bring back smoked brisket for a limited time starting November 5. It also plans to raise menu prices by about 3% in the fourth quarter, Reuters reported. These steps will provide a practical test of expectations for stronger sales at quarter-end, while margins and the ability to pass costs on through prices remain central to results in the coming period.