What’s Next for Chipotle?

Shares of Chipotle Mexican Grill (NYSE:CMG) fell over 8 percent in morning trading on Wednesday before cooling off to more modest losses of about 5.6 percent. Investors jumped ship after the company announced preliminary results for the fourth quarter, which suggest a weak end to the year and continued troubles in 2013.

Give me the numbers

Chipotle is expecting fourth-quarter earnings in the range between $1.92 and $1.97 per diluted share, below the $2.09 that analysts were looking for. However, the company is expecting revenue to climb 17.2 percent to $699.2 million, ahead of estimates for $690.86 million.

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Comparable restaurant sales are expected to increase 3.8 percent, but restaurant-level operating margins are expected to fall 150 basis points year over year to 24.6 percent. This is partially due to a a 130 basis-point increase in the cost of food, which is expected to sit at 33.5 percent of sales.

Analysts, clearly unhappy about the decreased earnings projection, threw up a number of red flags on Wednesday. Consensus seems to be that the restaurant’s tremendous growth rate can’t be sustained, and its premium valuation is no longer supported…