Chipotle Meets Expectations Amidst Challenges, Projects Steady Growth

Chipotle Mexican Grill (CMG) faced formidable headwinds to meet its fourth-quarter expectations, including inclement weather and tough comparisons to its strong second quarter. Nevertheless, the burrito chain managed to deliver impressive results:

* Same-store sales increased by 5.4% for the quarter.
* Full-year earnings surged by 7.4%.

Guidance and Outlook

For fiscal 2025, Chipotle anticipates:

* Same-store sales growth in the low-to-mid-single-digit range.
* Openings of 315-345 new locations, aiming to reach 7,000 restaurants in North America.

Fourth Quarter and Full-Year Earnings

Compared to Bloomberg consensus estimates:

Fourth Quarter
* Adjusted earnings per share: $0.25 (in line with expectations)
* Revenue: $2.85 billion (in line with expectations)

Full Fiscal Year
* Adjusted earnings per share: $1.12 (in line with expectations)
* Revenue: $11.3 billion (slightly below expectations)

Cost Pressures and Tariffs

* Food, beverage, and packaging costs rose to 30.4% of revenue, primarily due to inflation and a protein mix shift.
* The company raised prices by 2% in December and projects steady prices for 2025, but may consider further adjustments if inflationary pressures persist.
* Chipotle faces potential impacts from tariffs on Mexican and Canadian imports, but estimates a 60-basis-point increase in cost of sales if tariffs take full effect.

New Offerings and Innovation

* The limited-time Chipotle Honey Chicken offering has received a positive reception from the market.
* The company plans to launch more limited-time offerings in mid-to-late March.

Operational Efficiency and Automation

* The introduction of a digital makeline and Autocado robot is expected to enhance throughput and reduce labor costs.
* Chipotle intends to retrofit existing restaurants with these new technologies if successful.