Chipotle Mexican Grill recently announced better-than-expected quarterly earnings, buoyed by rising foot traffic in its restaurants. However, despite surpassing analysts’ estimates, the company faced a drop in its stock price due to a lower same-store sales forecast for 2025 and concerns about January’s weaker traffic. This news led to a more than 4% decline in Chipotle’s shares during extended trading.
Earnings per share came in at 25 cents adjusted, slightly exceeding the Wall Street expectation of 24 cents. Revenue also met forecasts at $2.85 billion, reflecting a 13.1% increase in net sales. While same-store sales saw a growth of 5.4%, it narrowly missed the anticipated 5.7% rise according to StreetAccount estimates. This growth trend was further supported by a 4% increase in transactions, continuing Chipotle’s streak of attracting more customers to its stores.
Despite the positive results, Chipotle’s executives noted a slight softening in sales towards the end of December, attributed to the holiday season and the inconsistency of mid-week holidays like Christmas and New Year’s Day. Additionally, the company highlighted the impact of external factors like weather events, such as wildfires in Los Angeles, affecting customer traffic in 2025 more than in previous years.
CFO Adam Rymer emphasized that while the underlying transaction trends remain healthy, Chipotle expects a low to mid single-digit same-store sales growth for the full year. This guidance was lower than analysts’ expectations of a 5.4% increase. Furthermore, the company anticipates potential challenges from tariffs on Canadian and Mexican imports, which could lead to a 60 basis point rise in cost of sales.
In a strategic move to boost sales, Chipotle reintroduced its Smoked Brisket limited-time menu item last September, priced higher than other protein options. This initiative contributed to the fourth-quarter net income of $331.8 million, or 24 cents per share, up from $282.1 million, or 20 cents per share, in the previous year. Adjusted for restaurant impairment charges and legal costs, Chipotle’s earnings reached 25 cents per share.
Looking ahead to 2025, Chipotle plans to open between 315 and 345 new locations, with over 80% of these featuring a “Chipotlane” for digital orders. This expansion strategy marks a shift from the company’s traditional focus on the U.S. market, as it aims to establish a stronger international presence. Notably, Chipotle entered Kuwait last year, marking its first venture into a new country in a decade.
The company’s growth trajectory and strategic initiatives underscore its commitment to innovation and customer engagement, despite the challenges posed by market fluctuations and external factors. As Chipotle continues to navigate the evolving landscape of the food industry, its focus on sustainable growth and operational excellence remains a cornerstone of its success.
This engaging and informative narrative captures Chipotle’s recent financial performance and strategic outlook, shedding light on the complexities and opportunities facing the renowned burrito chain in a dynamic market environment.
