Chipotle Traffic Grows for Third Straight Quarter, but Higher Costs Squeeze Margins

Chipotle Mexican Grill said Wednesday that customer traffic grew for a third straight quarter, but rising labor and corporate costs squeezed margins and pushed third-quarter earnings per share down from a year earlier.

Comparable restaurant sales rose 2.1% in the quarter ended Sept. 30, including a 1.3% increase in average check and a 0.8% gain in transactions, according to the earnings release Chipotle filed with an 8-K on Wednesday. Total revenue climbed 9.6% to $3.3 billion, driven mostly by new restaurant openings.

Traffic up, profit down

Net income fell to $339.9 million, or 27 cents a diluted share, from $382.1 million, or 29 cents, a year earlier. Adjusted EPS was also 27 cents, down 6.9%.

Operating margin narrowed to 13.7% from 15.9%, and restaurant-level operating margin slipped to 23.3% from 24.5%.

"Three consecutive quarters of positive comparable transaction growth demonstrates that our Recipe for Growth strategy is working," CEO Scott Boatwright said in the release. He cited menu and digital innovation, progress on the company's high-efficiency equipment rollout and entry into three new markets during the quarter.

Where the costs went

Food, beverage and packaging costs improved to 29.5% of revenue from 30.0%, helped by menu price increases, tariff relief and favorable limited-time offer mix, partly offset by inflation in beef and freight and higher protein usage.

Labor costs rose to 25.7% of revenue from 25.2%. Chipotle blamed lower sales volumes, higher wages and performance bonuses, extra restaurant labor to support promotions and operations, and higher insurance costs.

General and administrative expenses jumped to $185.2 million from $146.7 million, driven by stock-based compensation, performance bonuses and outside services tied to corporate initiatives. The effective tax rate rose to 25.6% from 23.1%.

Digital sales accounted for 38.8% of food and beverage revenue, up from 36.7% a year earlier.

Revenue for the first nine months of the year rose to $9.73 billion from $8.94 billion. Chipotle ended the quarter with $634.2 million in cash and cash equivalents.

Growth plans and buybacks

Chipotle opened 84 company-owned restaurants in the quarter, 53 of them with a Chipotlane drive-thru pickup lane, plus five international partner-operated locations. It had more than 4,200 restaurants as of Sept. 30.

The company reiterated its 2026 outlook for comparable restaurant sales growth in the low single digits and 350 to 370 new openings, including 10 to 15 international partner-operated restaurants. For 2027, it expects 340 to 360 new company-owned openings in the U.S. and Canada and around 15 to 25 company-owned and partner-operated restaurants outside those two countries.

Chipotle repurchased $110.0 million of stock during the quarter at an average price of $34.05 a share, and had $1.6 billion remaining under its buyback authorizations as of Sept. 30.

Sources

1. Chipotle Mexican Grill Form 8-K with third-quarter 2026 earnings release (Exhibit 99.1), filed Oct. 28, 2026 (accession 0001058090-26-000103)

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