Here's our initial take on Chipotle's (CMG -13.34%) financial report.
Key Metrics
| Metric | Q2 2024 | Q2 2025 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $2.97 billion | $3.06 billion | 3% | Missed |
| Earnings per share (adjusted) | $0.34 | $0.33 | (2.9%) | Met |
| Comparable restaurant sales | 11.1% | (4%) | (15.1) pp | n/a |
| Operating margin | 19.7% | 18.2% | (1.5) pp | n/a |
Fewer People Are Going to Chipotle
Chipotle managed to eke out 3% revenue growth in the second quarter, below analyst expectations, only because it opened 61 new company-owned restaurants. Comparable-restaurant sales dropped 4%, compared to 11% growth in the same period last year, driven by a 4.9% decline in transactions.
Profitability also suffered. Adjusted earnings per share was down slightly, while operating margin contracted by 1.5 percentage points to 18.2%. The negative impacts of lower sales volumes and cost inflation for some ingredients were partially offset by menu price increases.
Chipotle CEO Scott Boatwright pointed to momentum from the company's summer marketing initiatives, which could start to improve results. For the full year, Chipotle expects comparable restaurant sales to be roughly flat, which implies a meaningful improvement in the second half.
Immediate Market Reaction
Shares of Chipotle plunged 11% in after-hours trading Wednesday, with investors reacting negatively to the company's revenue miss. While the company's outlook called for some improvement in the second half of the year, investors may not be buying the story. Going into the second-quarter report, Chipotle stock was down about 12% year to date.
What to Watch
This is the second quarter in a row Chipotle missed expectations and also the second quarter in a row the company dialed back its full-year outlook. While guidance calling for roughly flat comparable-restaurant growth for the full year would be an improvement over the second quarter, the company had previously guided for low- to mid-single-digit growth.
It's difficult to know how much of Chipotle's sales woes are due to company-specific issues and how much are due to the macroeconomic environment. While the company benefited from a boost to menu prices, those higher prices could be more than some of its customers are willing to pay. With two quarters of weak results and lowered expectations, investors are right to be wary of Boatwright's talk of "momentum."
