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CHIPOTLE MEXICAN GRILL INC (CMG)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $2.88B (+6.4% YoY) with comps down 0.4% as lower transactions (-2.3%) were partially offset by +1.9% average check; diluted EPS was $0.28 and adjusted diluted EPS $0.29 .
  • Against S&P Global consensus, EPS modestly beat while revenue missed: EPS $0.29 vs $0.277; revenue $2.88B vs $2.94B; 30 EPS and 25 revenue estimates; digital mix was 35.4% .
  • Guidance trimmed: full-year 2025 comps lowered to low single digit (from low-to-mid single digit in Q4), openings maintained at 315–345 with >80% Chipotlanes, tax rate unchanged at 25–27% .
  • Management cited weather, consumer spending slowdown, and emerging tariff headwinds; expects positive comps exiting Q2 and return to positive transactions in 2H, with marketing ramp and Honey Chicken LTO supporting traffic .

What Went Well and What Went Wrong

What Went Well

  • Adjusted EPS grew 7.4% YoY to $0.29; GAAP diluted EPS grew 7.7% YoY to $0.28 .
  • Honey Chicken LTO outperformed prior LTOs, driving an estimated 100–200 bps lift in transactions despite macro headwinds; management plans future cadence of up to three LTOs annually .
  • New unit growth remained strong: 57 company-owned openings (48 with Chipotlanes) and two licensed international; Chipotlanes continue to enhance sales, margins, and returns .
    • Quote: “Chipotle Honey Chicken is off to a terrific start, driving incremental transactions in our restaurants.” – CEO Scott Boatwright .

What Went Wrong

  • Comparable sales declined 0.4% on -2.3% transactions; softness particularly at lunch, with dinner holding up better .
  • Restaurant-level operating margin fell 130 bps YoY to 26.2%; cost of sales rose to 29.2% on inflation and higher usage of avocados, dairy, chicken, and LTO mix .
  • Digital “white label” softened (shift to order-ahead pickup and in-restaurant); management will target personalization and friction reduction; stacked two-year trends dipped a few hundred bps in Feb/March before modest April improvement .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$2.79 $2.85 $2.88
Diluted EPS ($)$0.28 $0.24 $0.28
Adjusted Diluted EPS ($)$0.27 $0.25 $0.29
Operating Margin (%)16.9% 14.6% 16.7%
Restaurant-Level Margin (%)25.5% 24.8% 26.2%
Comparable Sales (%)+6.0% +5.4% -0.4%
Digital Mix (% of F&B sales)34.0% 34.4% 35.4%
Cost of Sales (% of revenue)30.6% 30.4% 29.2%
Labor (% of revenue)24.9% 25.2% 25.0%
KPIsQ3 2024Q4 2024Q1 2025
Company-owned Restaurants Opened (count)86 119 57
Chipotlanes in Openings (count)73 95 48
Licensed Restaurants Opened (count)1 1 2
Company-owned Restaurants at Period-End (count)3,615 3,726 3,781
Average Restaurant Sales ($)$3,184 $3,213 $3,186
Net Income ($MM)$387.4 $331.8 $386.6
Q1 2025 vs EstimatesActualConsensus (S&P Global)Surprise
Revenue ($USD)$2,875,253,000 $2,943,581,610*Miss (~$68.3M)
EPS ($)$0.29 (Adj) / $0.28 (GAAP) $0.27692*Beat (Adj ~5%; GAAP ~1%)
# of Estimates—EPS: 30*, Revenue: 25*—

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024)Current Guidance (Q1 2025)Change
Comparable Restaurant Sales GrowthFY 2025Low to mid-single digit Low single digit Lowered
New Company-Owned OpeningsFY 2025315–345; >80% Chipotlane 315–345; >80% Chipotlane Maintained
Underlying Effective Tax RateFY 202525%–27% 25%–27% Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q1 2025)Trend
Consumer/MacroTransactions drove comps in Q3/Q4; strong brand metrics Weather and consumer spending slowdown; stacked 2-yr comp ~7% Feb/Mar, +~100 bps into April; positive comps expected exiting Q2 Deteriorated, stabilizing by late Q1
Tariffs/Supply ChainNot highlighted in prior PRsNew aluminum and broad 10% tariffs; ongoing ~50 bps COGS impact; ~20 bps in Q2; categories: beef (Australia), packaging (SE Asia), avocados (Colombia/Peru) Emerging headwind
Technology/Back-of-HouseFocus on throughput; brand initiatives Producer slicer rollout by summer; equipment package scaling to 100 restaurants; Autocado and augmented makeline back into testing Scaling execution
Product PerformanceSmoked Brisket drove mix in Q3; strong transaction growth Honey Chicken LTO outperformed, driving incremental transactions; planning up to three LTOs per year Positive momentum
Digital & LoyaltyDigital ~34–35% mix in Q3/Q4 Marketplace stable; white label softer; AI-driven personalization tests improving engagement; summer marketing ramp Mixed; improving personalization
Regional TrendsMiddle East openings; U.S. growth Canada margins at U.S. level; Western Europe margins improving; Mexico entry via Alsea in early 2026 Strengthening internationally

Management Commentary

  • “Current underlying trends would result in a low single-digit full year comp and [a] return to positive transaction growth in the second half of the year.” – CEO Scott Boatwright .
  • “For Q2, we expect our cost of sales to be in the high 29% range… and [estimate] tariffs will have an ongoing impact of about 50 basis points.” – CFO Adam Rymer .
  • “Honey Chicken… is outpacing [Al Pastor]… driving [~100–200 bps] transactions… despite a tough consumer environment.” – Management .
  • “We will meaningfully ramp up our marketing spend to reach more guests… [with] digital and social… and rewards platform.” – CEO Scott Boatwright .

Q&A Highlights

  • Macro vs company-specific: Management sees broad macro-driven pullback; brand KPIs and value perception at records; dinner holding up better than lunch .
  • Tariffs impact: ~50 bps ongoing COGS headwind; ~20 bps in Q2 included in guidance; affects beef (Australia), packaging (SE Asia), avocados (Colombia/Peru) .
  • Marketing ramp and ROI: Summer spend to stabilize seasonality; aiming for measurable ROAS via streaming/social/Rewards personalization .
  • Unit growth and cannibalization: Drag to comps has ticked up with higher openings but remains ~80–100 bps; returns remain strong (year-2 around 60%) .
  • LTO cadence: Potential move to ~3 LTOs annually to maintain novelty and transaction lift without overextending duration .

Estimates Context

  • EPS beat and revenue miss vs S&P Global consensus for Q1 2025: EPS $0.29 vs $0.277; revenue $2.88B vs $2.94B; 30 EPS and 25 revenue estimates.*
  • With comps guidance lowered to low single digit and tariff headwinds, near-term revenue and margin estimates may shift lower, partially offset by marketing ramp and Honey Chicken momentum into Q2/H2 .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near term: Expect choppy comps through Q2 given tough April compare and tariff inflation; management targets positive comps exiting Q2 and positive transactions in H2 .
  • Pricing/mix: No near-term pricing lever emphasized; strategy focuses on value perception, hospitality, throughput, and targeted marketing to drive transactions .
  • Margin trajectory: Restaurant-level margin impacted by higher usage and inflation; Q2 cost of sales guided to high 29% with tariff adders; equipment/producer slicer rollouts should aid prep efficiency and throughput over time .
  • Product engine: Honey Chicken LTO is a traffic driver; planned LTO cadence enhances engagement and can provide episodic transaction tailwinds .
  • Capital allocation: Ongoing buybacks ($553.7M in Q1, $875M remaining authorization) support EPS resilience; balance sheet strong with ~$2.1B cash/Restricted/Investments and no debt .
  • International expansion: Canada and Western Europe margins improving; Mexico entry via Alsea in early 2026 adds optionality to multi-year growth .
  • Guidance reset: Comps lowered to low single digit; openings and tax maintained—watch for execution on marketing and throughput initiatives as catalysts to reaccelerate transactions .
Non-GAAP notes: Adjusted EPS excludes retention equity awards and certain legal matters; adjusted G&A reduced for the same items; adjusted tax rate reflects after-tax impact of non-GAAP items **[1058090_20250423LA71397:10]** **[1058090_0001058090-25-000028_cmg-20250423xex991.htm:9]** **[1058090_0001058090-25-000028_cmg-20250423xex991.htm:10]**.

Share repurchases: $553.7M at avg $54.15 in Q1; $874.7M remaining, including new $400M authorization (Mar 27, 2025) **[1058090_0001058090-25-000028_cmg-20250423xex991.htm:1]** **[1058090_0001058090-25-000028_cmg-20250423.htm:2]**.