The Magic of Margin

Hi, Tom here.

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I want to talk to you about margins today. They move your portfolio. And they define your financial life.

As you plan for retirement, don’t overlook them.

Here’s why.

Chipotle is a fantastic company.

By almost every measure, they’re elite—
From their guacamole, to their perfectly salty chips, to their profit margins and shareholder returns.

[ Full disclosure: I own Chipotle stock. We’re picking on Chipotle today as it’s an easy example. This is not a solicitation to buy or sell the stock. ]

Chipotle’s entire business can be summed up by one tiny number:
Earnings per share (EPS).

Chipotle’s current EPS is $1.14.

That means for every share of stock outstanding, the company earns $1.14 in profit per year.

Every day, Chipotle employees work to sell more burritos and guac, while investors battle over whether that $1.14 can keep growing.

This dynamic is what drives the stock price. More specifically, it’s the quality of those earnings that drives the share price—remember, Wall Street cares how a company earns money, not just that they earn money.

This fact translates into a valuation multiple that investors assign to the company.

For simplicity, let’s use the widely known and taught price-to-earnings ratio (P/E).
Today, Chipotle’s P/E is 44.32.
You get that by dividing the share price by the earnings per share.

Which means:

Now let’s tie this into your financial life.

As of the end of 2024, Chipotle had 3,726 stores and over $11.3 billion in revenue.

That means your local Chipotle is probably doing about $3 million per year in business.

Not bad.

Now here’s where it gets interesting:
Chipotle’s profit margin is roughly 20%.
So your local shop, if it’s average, makes $600,000 in profit each year.

But what if each store sold just 10 more burritos a day?

That’s 5 more customers at lunch, 5 more at dinner. Not a massive jump.

Right?

If that happened across every store, Chipotle would pull in an extra $33 million per quarter in revenue.

Most of that would fall straight to the bottom line—because the infrastructure is already in place. The staff is clocked in. The guac is made. The app is working.

Let’s say $25 million in new earnings drops to the bottom line.

Now apply the current PE multiple of 44:
$25 million x 44 = $1.1 billion in new shareholder value, because they sold five extra burritos at lunch and dinner.

One billion dollars in enterprise value.

That’s the power of small improvements at the margin.

Now Flip the Story

What if each Chipotle location sold 10 fewer burritos per day?

Before reading this, you might think, “That’s not a big deal—they’ll be fine.”

But that small drop?
It cuts directly into profit. And when earnings drop—even slightly—Wall Street notices.

Fewer burritos → less profit → lower valuation.

That’s how margins work.
Don’t believe me?

Here’s a chart of Chipotle’s quarterly earnings and market cap.
You’ll see how sensitive the market is to any shift in performance expectations.

When burrito sales are down, so is the share price.

Even a small dip—just slightly fewer burritos—can wipe out billions in market value.

We’ve seen periods where Chipotle lost over $10 billion in market cap…
Not because the food changed.
But because investors questioned the company’s ability to grow margin.

Your portfolio is full of companies trying to maximize the margin and improve the quality of their earnings, and their business.

Today’s edition is a reminder for you to do the same.

If you can keep your savings margin intact—spend a little less, earn a little more, avoid one bad investment—that margin adds up over time.

Imagine if your financial life were a publicly traded company—like Chipotle.
And every decision that hit your bottom line had a P/E of 44 attached to it.

Every small win = amplified gain.
Every small mistake = amplified cost.

Wouldn’t that change how you operate?

Protecting and Maximizing Your Margin

Here’s the challenge:
Saving money while you’re working is one thing.

That’s when the math gets tighter.
And every small win—or small mistake—starts to compound.

We survey new readers all the time.
Roughly 60% of you are making six figures and have between $500,000 and $5,000,000 in assets.

The average tmrw reader? Sitting on a 7-figure net worth and in the top 5% of U.S. households.

You’ve done well.
You’ve built something.

But guess what? Even a $67 billion company like Chipotle can be meaningfully impacted if every store just sells a few more burritos a day.

Margins matter.

And if this sounds a bit preachy—I get it.
But I’m talking to myself here, too.

Even when your portfolio is cruising through the seven figures… Even after stellar back-to-back years in the market like 2023 and 2024.

The margins still matter

• Spend $500 less per month? That’s $6,000 per year you don’t have to withdraw.

• Avoid one bad investment? That’s years of runway regained.

• Make just a 1% better return? That’s tens of thousands over a decade.

That’s the game:
Win at the margin. Repeat over time.

This isn’t about being miserly.
It’s about being wise.

It’s how great companies grow.
And how Solomon, in the book of Proverbs, put it thousands of years ago:

This is about understanding just how much the little things matter—
Especially when your working years are over and the margin gets thinner.

Retirement planning isn’t complicated.

Spend less than you make.
Invest the difference.
Repeat.

The hard part?
Doing that without a paycheck.
Doing that when inflation hits.
When the market dips.
When you want to help your kids, travel, give generously, and live well.

That’s why margin matters.

In big business, the burrito business, and in your retirement.

Two ways we can help you win at the margin:

• BluePrint — Our flat-fee financial planning engagement. Designed for individuals and couples who want expert guidance without a long-term commitment. We’ll help you clarify your goals, assess your risk, and map out a plan to retire on your terms. If you’re looking for high-impact financial advice—fast—this is the place to start. Let’s start with a quick conversation.

• Bergen — Our flagship wealth management offering for those with $1M+ in investable assets. We work with financially successful families navigating retirement, transitions, and legacy decisions. Bergen is more than portfolio management and traditional advising—it’s about helping you reduce complexity, optimize income, minimize tax drag, and helping make sure your financial life fully supports your values, family, and goals. Let’s have a conversation.

I’d love to help you win at the margin. Our process is unique—and built with your freedom in mind.

We serve clients in 22 states. Let’s map out your next move.

Talk soon,
Tom