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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)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$2.973 $2.794 $2.845
Diluted EPS ($)$0.33 $0.28 $0.24
Operating Margin (%)19.7% 16.9% 14.6%
Restaurant-Level Operating Margin (%)28.9% 25.5% 24.8%
Net Income Margin (%)15.3% 13.9% 11.7%

Year-over-year comparison (Q4)

MetricQ4 2023Q4 2024
Revenue ($USD Billions)$2.516 $2.845
Diluted EPS ($)$0.20 $0.24
Operating Margin (%)14.4% 14.6%
Restaurant-Level Operating Margin (%)25.4% 24.8%
Net Income ($USD Millions)$282.1 $331.8
Net Income Margin (%)11.2% 11.7%

KPIs

KPIQ2 2024Q3 2024Q4 2024
Comparable Sales (%)11.1% 6.0% 5.4%
Transaction Growth (%)8.7% 3.3% 4.0%
Average Check Change (%)2.4% 2.7% 1.4%
Digital Sales (% of F&B)35.3% 34.0% 34.4%
Restaurants Opened (Company-owned)52 86 119
Chipotlanes Opened46 73 95
Average Restaurant Sales (TTM, $USD Thousands)$3,146 $3,184 $3,213

Non-GAAP note: Restaurant-level operating margin and adjusted EPS are non-GAAP; reconciliations provided in the company’s release .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Comparable Sales GrowthFY 2025Not provided previouslyLow-to-mid single digits New
New Openings (Company-owned)FY 2025315–345 with ≥80% Chipotlane 315–345 with ≥80% Chipotlane Maintained
Underlying Effective Tax RateFY 2025Not provided for FY2525–27% (before discrete items) New
Cost of Sales (% of revenue)Q1 2025N/AHigh 29% range New
Labor Costs (% of revenue)Q1 2025N/AHigh 24% range; stepping to low-single-digit wage inflation after Q2 (lap CA) New
Marketing (% of sales)Q1 2025 / FY 2025N/AQ1 below ~3%; FY mid-2% range New
Depreciation (% of sales)FY 2025N/A~3% New
Pricing (net)FY 2025N/A~2% for FY25 (Dec pricing carry, lap CA pricing in Apr) New
Tariff SensitivityOngoingN/A~60 bps cost-of-sales impact if tariffs fully implemented; ~2% of sales sourced from Mexico New
Share Repurchase AuthorizationAs of Q4 end$1.1B remaining as of 9/30/24 $1.0B remaining as of 12/31/24; +$300M authorized Dec 17, 2024 Updated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Throughput & OperationsFocus on throughput; handling strong demand from Chicken Al Pastor Throughput improved ~2 entrees in peak 15 minutes; “manager on duty” at expo in >60% restaurants; more work to do Improving but with runway
Back-of-house modernizationNot highlighted in Q2/Q3 filingsRolling out produce slicers by summer; testing dual-sided plancha, rice cooker, dual-vat fryer; new equipment in all new openings later in 2025 Accelerating
Product pipeline/LTOsChicken Al Pastor drove demand Brisket LTO strong and sustained; Honey Chicken coming; not embedded in guidance Robust; supportive to comps
Digital/AI & personalizationDigital mix ~35% AI assistant to predict churn and drive personalized journeys; digital mix 34% Strategic build
Supply chain & inflationAvocado inflation noted Cost of sales headwinds (portions, brisket mix, avocado/dairy); tariff sensitivity 60 bps potential; diversified avocado sourcing (approx. 50% non-Mexico) Pressured, mitigations in play
Pricing philosophyPrice to offset inflation; Q2 price actions previously FY25 pricing ~2%; lap CA wage pricing in April; margins to grow via transactions Disciplined
International & licensingMiddle East entry noted in 2024 85 international restaurants; accelerating Canada/Middle East; pipeline in Europe; Alshaya partnership progressing Scaling
Unit growth & ChipotlanesGuidance 8–10% growth; strong Chipotlane economics 304 openings in 2024; 315–345 planned in 2025; Chipotlanes > margins/returns and over 25% of fleet Sustained strength
Regulatory/wageCA wage impact noted Wage inflation mid-single digits Q1; lapping CA step-up in Q2 drives low-single digits thereafter Normalizing after Q2

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 .