CM
CHIPOTLE MEXICAN GRILL INC (CMG)·Q4 2024 Earnings Summary
Executive Summary
- Q4 2024 delivered transaction-driven growth: revenue rose 13.1% to $2.85B, comps +5.4% (transactions +4.0%, average check +1.4%), though restaurant-level margin fell 60 bps YoY to 24.8% and operating margin was 14.6% .
- EPS was $0.24 GAAP and $0.25 adjusted, up 20% and 19% YoY, respectively; digital sales were 34.4% of food & beverage revenue .
- 2025 outlook: full-year comps low-to-mid single digits; 315–345 openings (≥80% Chipotlanes); underlying effective tax rate 25–27%; Q1 guide points include cost of sales in high-29% range, labor in high-24% range, and marketing below ~3% of sales .
- Street consensus from S&P Global was not available at the time of this analysis; comparisons vs estimates therefore cannot be provided (SPGI request limit error).
What Went Well and What Went Wrong
What Went Well
- Strong top-line: revenue +13.1% to $2.85B; comps +5.4% driven by +4.0% transactions and +1.4% average check .
- Unit growth and format mix: 119 openings in Q4 (95 Chipotlanes); full-year 304 openings and 1,068 Chipotlanes at year-end—Chipotlanes continue to drive higher revenues, margins, and returns .
- Brisket LTO outperformed and sustained into January, driving transactions and premium mix; management highlighted continued momentum and positive brand metrics (AUVs reached $3.213M TTM exiting Q4) .
- CEO strategic focus: “guest obsessed” culture and modernization of back-of-house (produce slicers, dual-sided plancha, rice cooker, dual-vat fryer) to improve throughput, consistency, and team experience .
What Went Wrong
- Margin pressure: restaurant-level margin declined to 24.8% (−60 bps YoY); food costs rose to 30.4% of revenue (+70 bps YoY) on portions, brisket mix, and avocado/dairy inflation; labor up to 25.2% (+20 bps) .
- Mix drag: CFO noted ~70 bps total mix headwind in Q4 (50 bps underlying after loyalty true-up), driven by smaller group sizes late-December; partly offset by premium brisket .
- Early 2025 volatility: January comps saw ~400 bps weather/calendar headwind; company expects Q1 transaction comps ~flat, tougher 1H compares (including CA pricing roll-off ~90 bps in April and Easter timing) .
Financial Results
Sequential performance (QoQ)
Year-over-year comparison (Q4)
KPIs
Non-GAAP note: Restaurant-level operating margin and adjusted EPS are non-GAAP; reconciliations provided in the company’s release .
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- CEO: “I want to make sure that as we continue to scale Chipotle, everything we do is in service of our guests or those who serve our guests…[to] reach 7,000 restaurants in North America, grow our AUVs beyond $4 million, expand margins and [become] a global iconic brand.” .
- CEO on modernization: rolling out produce slicers by summer and outfitting new restaurants with dual-sided plancha, three-pan rice cooker, and dual-vat fryer to drive efficiency and consistency .
- CFO on Q1 setup: cost of sales high-29% range; labor high-24%; marketing below ~3%; depreciation ~3% of sales; underlying tax rate 25–27% .
- CFO on mix and pricing: FY25 pricing ~2% (carry of Dec price, lap of CA price in April); underlying Q4 mix drag ~50 bps (group size); brisket supported premium mix .
- CEO on digital: “leaning into the AI assistant…pre-defection journey…personalized extras and offers to encourage reengagement” .
- CEO on international/licensing: Alshaya partnership “going really, really well” with expansion in Kuwait/Dubai; building pipeline in Europe .
Q&A Highlights
- Comps trajectory: January weather/calendar impact (~400 bps) left underlying trend ~+2%; Q1 transaction comps expected ~flat; tougher 1H compares (Barbacoa/Al Pastor lap, Easter timing) .
- Pricing: FY25 net pricing ~2%; philosophy is to use price to offset permanent inflation and grow margins via transactions .
- Cost structure: 2025 portion investment offset targeted by 2H via supply chain efficiencies and produce slicers; tariffs (if fully implemented) would add ~60 bps to cost of sales .
- Flow-through: incremental restaurant-level flow-through ~40% remains intact; expect ~20% in 2H as portion offset materializes .
- Equipment impact: produce slicer saves labor time; plan to redeploy some labor and capture some margin; broader retrofit being stage-gated .
- LTOs in guidance: upcoming Honey Chicken not embedded in FY25 comp guide .
Estimates Context
- S&P Global Wall Street consensus for Q4 2024 (EPS, revenue, EBITDA) could not be fetched due to a data limit error; therefore, we are unable to provide “vs. estimates” comparisons at this time.
- Given this, we anchor the analysis on actuals vs prior quarter and prior year as reported in the company’s filings and call .
Key Takeaways for Investors
- Transaction momentum intact (+4% in Q4) with robust LTO pipeline (Brisket strong; Honey Chicken forthcoming) and throughput initiatives likely to support low-to-mid single-digit comps in 2025 despite 1H headwinds .
- Near-term margin pressure from portions, brisket mix, and avocado/dairy inflation is guided to ease progressively, with 2H benefitting from supply chain efficiencies and equipment rollout (produce slicers) .
- Cost discipline and pricing philosophy remain conservative—~2% FY25 pricing; margin expansion to be driven by transactions and operational efficiency rather than price .
- Chipotlane-led unit growth (315–345 openings in 2025, ≥80% Chipotlanes) continues to compound AUVs and returns; international/licensing expansion adds optionality .
- Watch tariff developments (potential ~60 bps cost-of-sales headwind) and avocado costs; diversified sourcing mitigates risk (about half non-Mexico) .
- Tactical trading: Q1 set-up is noisy (weather/calendar; tough laps), with management pointing to flattish transactions; LTO launches and equipment/ops execution are key catalysts for 2H margin and comp acceleration .
Appendix: Non-GAAP Adjustments
- Adjusted EPS: $0.25 in Q4, excluding items such as legal reserves and retention grants; reconciliations provided .
- Restaurant-level operating margin: 24.8% in Q4; definition and reconciliation provided .
Additional Relevant Press Releases
- Company press release announced Q4/FY 2024 results and reiterated outlook; details match SEC 8-K .
- Upcoming Honey Chicken launch (Mar 2025) as referenced on the call; note LTO not embedded in guidance .