Chipotle Q3 2026: revenue up 9.6% on new stores, EPS down 6.9% to $0.27 as store margin fell to 23.3%

Chipotle's third quarter (the three months to September 30, 2026) brought in $3.29 billion of revenue, up 9.6% from a year earlier, almost all of it from having more restaurants. Profit fell: income from operations dropped 5.3% to $452.0 million and net income fell 11.1% to $339.9 million. Diluted earnings per share (profit divided by the shares outstanding) fell 6.9% to $0.27, a smaller drop than net income only because there were 5.4% fewer shares after a year of buybacks. Restaurants that were already open sold 2.1% more, with 0.8% more customer visits, but the cost of running each restaurant rose faster than its sales again. This report is based on the earnings release (Form 8-K, Exhibit 99.1, October 28, 2026); the full 10-Q has not been filed yet, so the detailed revenue bridge and the explanation of some cost lines are not available.

The numbers

A few terms carry this report. Operating margin is the share of revenue left after all operating costs, before interest and tax. Comparable restaurant sales ("comps") cover only restaurants open at least 13 full calendar months, so they show whether an existing restaurant is doing more business, without the effect of simply having more locations. Restaurant-level operating margin is what's left of revenue after the four costs of running a restaurant (food, labor, rent and other store-level costs) and before head-office costs; it is the most direct read on how profitable each store is.

Where the growth came from

Revenue rose $289.7 million. The release says the increase "was driven by new restaurant openings and, to a lesser extent, comparable restaurant sales." Chipotle ended September with 4,267 company-owned restaurants, 351 more than a year earlier. The release does not split the $289.7 million between new stores and existing ones (the 10-Q usually does). A 2.1% comp on a base of roughly $3 billion is in the region of $60 million, which would leave about four-fifths of the growth to new restaurants, similar to the 80% share in Q2. That split is our estimate, not a company figure.

The +2.1% comp breaks into a 1.3% higher average check and 0.8% more transactions. The comparison is easy: Q3 2025 comps were only +0.3%. Over the last five quarters comps went +0.3%, −2.5%, +0.5%, +2.2% and +2.1%, so the recovery that began in Q1 has held but did not speed up in Q3.

Average restaurant sales (trailing 12-month revenue of a typical restaurant open at least a year) were $3.106 million, 0.8% below a year earlier ($3.132 million) but up slightly from $3.102 million in Q2. The decline is narrowing.

Digital orders (app, website and delivery apps) rose to 38.8% of food and beverage revenue from 36.7%.

Why margins fell

Food (−0.5 pts) improved. This line hurt in Q2. The release credits menu price increases, "tariff relief" and a favorable mix of limited-time menu items, offset partly by inflation "primarily in beef and freight" and higher protein usage (bigger portions). Beef is still a cost problem, but pricing and lower tariffs now more than cover it.

Labor (+0.5 pts). The release lists "lower sales volumes" (fewer sales per store to spread fixed staffing over), wage inflation and performance bonuses, extra restaurant labor for promotions and operations, and higher insurance costs, partly offset by menu prices.

Other operating costs (+1.0 pt), again the largest drag. This line covers marketing, delivery fees, utilities, maintenance and similar store expenses. The release gives no explanation for the increase. In Q2 the 10-Q attributed a 0.9-point rise to marketing and to inflation in insurance claims, maintenance and utilities. It rose $75.3 million (+16.7%) against 9.6% revenue growth.

Below the restaurant line, general and administrative (head-office) expenses rose 26.2% to $185.2 million, which the release attributes to stock-based compensation, performance bonuses and "outside services related to corporate initiatives." Excluding the executive retention stock awards, adjusted G&A rose faster, 32.5% to $183.8 million from $138.7 million, because those awards were larger a year ago. Impairment, closure costs and asset disposals rose to $13.3 million from $7.4 million. Depreciation grew 13.4% to $102.6 million, ahead of sales, reflecting the restaurant equipment rollout.

What the headline numbers hide

The adjusted figures don't change the picture. Adjusted EPS was $0.27 against $0.29, the same as GAAP. This quarter's adjustments total only $5.8 million pre-tax ($4.3 million of restaurant asset impairment and $1.5 million of retention stock awards); a year ago they were $8.1 million. Adjusted net income fell 11.6% to $344.6 million, in line with the GAAP decline.

Buybacks did half the work on EPS. Net income fell 11.1%, but diluted shares were 5.4% lower, so unrounded EPS fell about 6% ($0.2681 vs $0.2853). At last year's share count, EPS would have fallen by the full 11%.

Below the operating line, two drags made the profit decline worse. Operating income fell 5.3%, but pre-tax income fell 8.0%. Interest and other income dropped to $5.2 million from $19.8 million, because cash and investments were spent on buybacks over the past year. The tax rate rose to 25.6% from 23.1%, which the release attributes to more nondeductible expenses and fewer tax credits. At last year's tax rate, net income would have been about $12 million higher. Neither is a one-off: lower interest income is the lasting cost of the buyback, and the tax rate is within the 24–26% full-year guide.

Cash flow is again flattered by tax timing. Nine-month operating cash flow rose 13.9% to $1.922 billion, 1.8 times net income of $1.046 billion (down 13.2%). Most of the gap is taxes: cash taxes paid were $102.6 million against $319.0 million a year earlier, and a $112.3 million income tax payable now sits on the balance sheet. The 2026 figure also includes $93.0 million spent buying federal transferable energy credits. When those taxes are paid, cash flow will fall back toward earnings.

Capital spending is up sharply, and buybacks have slowed. Nine-month capital spending was $640.6 million, up 36.6%, as new restaurants and equipment for existing ones take more cash. Nine-month buybacks were $1.465 billion, more than the $1.282 billion left after capex, but almost all of that was in the first half. Q3 repurchases were only $110.0 million at an average $34.05 a share, against $630.7 million in Q2. Cash rose to $634.2 million from $350.5 million at year-end, and cash plus investments reached about $1.0 billion. $1.6 billion of buyback authorization remains. Chipotle pays no dividend and has no debt.

Receivables and inventory are not a concern. Customers pay at the till; both lines are small and released cash in the nine months.

On balance the quarter is flattered: a 5.4% smaller share count turned an 11.1% fall in net income into a 6.9% fall in EPS, while one-off items were small in both years.

Takeaway: Chipotle fixed the cost it could price for and lost ground on the ones it couldn't. Food costs fell 0.5 points as menu prices and tariff relief outran beef inflation, but labor and other store costs added 1.5 points, so a 2.1% comp still left restaurant margin 1.2 points lower. Sales per existing store need to grow faster than about 2% before new restaurants add profit, not just revenue.

Did last time's read hold up?

Our Q2 report said the Q3 report would check two things: whether comps held in the low-single-digit range despite the "low-single-digit headwinds" the Q2 10-Q described, and whether restaurant-level margin stopped falling.

• Comps held. +2.1% against +2.2% in Q2, with transactions still positive. The headwinds the 10-Q warned of did not push the quarter back toward flat.
• Margin decline slowed but didn't stop. Restaurant-level margin fell 1.2 points from a year earlier, compared with 2.2 points in Q2. Q2 named beef and freight as the main food-cost problem; in Q3 food costs improved despite beef, so pricing caught up on food. The pressure moved to labor and other operating costs.
• The buyback slowed, as Q2's report expected. We wrote that buybacks were using more cash than the business generated after capex and that EPS would eventually need margin support. Q3 repurchases fell to $110 million, about a third of the quarter's roughly $350 million operating cash flow after capex, so share-count support for EPS will shrink from here.

Outlook

Management kept its 2026 guidance: full-year comps "in the low single digit range," 350 to 370 new restaurant openings including 10 to 15 international partner-operated ones, about 80% of new company-owned restaurants with a Chipotlane (a drive-through pickup lane), and an underlying tax rate of 24% to 26%. For 2027 it expects 340 to 360 new company-owned restaurants in the U.S. and Canada and 15 to 25 company-owned and partner-operated restaurants outside them, slightly fewer U.S. and Canada openings than this year's pace.

Nine-month comps are about +1.6%. Q4 compares against a −2.5% quarter, which makes it easier to stay inside the low-single-digit range. Through September Chipotle opened 233 company-owned and 6 partner-operated restaurants, so the guide implies about 110 to 130 more in Q4, near last year's 132.

Our read: the near-term question is costs, not demand. Three things to watch in the Q4 report and the 10-Q:

• Other operating costs. This was the largest drag in both Q2 and Q3 (+0.9 and +1.0 pts). The 10-Q should show how much is marketing, which can be cut, and how much is insurance, maintenance and utilities inflation.
• Whether tariff relief and pricing keep food costs down. The 0.5-point improvement depends partly on tariff relief and limited-time offer mix, which may not last; beef inflation is still there.
• Head-office costs and the buyback. Adjusted G&A rose 32.5% while revenue rose 9.6%. With buybacks slower and interest income mostly gone, EPS now depends on operating profit growing, which needs restaurant margins to stop falling.

Source: Chipotle Mexican Grill, Inc. earnings release for the quarter ended September 30, 2026 (Form 8-K, Exhibit 99.1, filed October 28, 2026). The Form 10-Q for the quarter had not been filed when this report was written; first-half figures are from our Q2 2026 report.