Chipotle Meets Expectations Despite Challenges, Provides Conservative Guidance

Q4 and Full-Year Earnings

Chipotle Mexican Grill (CMG) reported positive financial results for Q4 and the full fiscal year, surpassing analyst estimates. Same-store sales grew by 5.4% and 7.4% respectively.

Transaction Growth and Margin Expansion

CEO Scott Boatwright highlighted strong transaction-driven sales growth and margin expansion. The company expects same-store sales to rise in the low-to-mid-single-digit range in fiscal 2025, anticipating tougher comparisons.

Expansion Plans

Chipotle plans to open between 315 and 345 new locations this fiscal year, aiming to reach 7,000 restaurants in North America.

Analyst Outlook

Analysts remain cautious despite the guidance. Stifel's Chris O'Cull projected mid-single-digit same-store sales growth, aligning with Wall Street estimates of 5.3%. Shares declined by 5% in after-hours trading.

Earnings Breakdown

Q4 Results:

* Adjusted earnings per share: $0.25 (in line with estimates)
* Revenue: $2.85 billion (in line with estimates)
* Same-store sales growth: 5.4% (slightly below estimates)
* Average check growth: 1.4% (above estimates)
* Traffic growth: 4% (below estimates)

Full-Year Results:

* Adjusted earnings per share: $1.12 (in line with estimates)
* Revenue: $11.3 billion (slightly below estimates)
* Same-store sales growth: 7.4% (in line with estimates)
* Average check growth: 2.1% (slightly above estimates)
* Traffic growth: 5.3% (below estimates)

Tariff Impact

CFO Adam Rymer stated that the company's guidance does not include the potential impact of tariffs. Chipotle imports a limited amount of ingredients from Mexico, Canada, and China, potentially resulting in a 60 basis point impact on cost of sales if tariffs are fully implemented.

Food and Packaging Costs

Food, beverage, and packaging costs increased to 30.4% of revenue due to increased portions, protein mix shift, and inflation.

Price Strategy

Chipotle implemented a 2% price increase in December. The company expects stable prices in 2025, with potential adjustments in case of significant inflation.

Chipotle Honey Chicken

The limited-time offering of Chipotle Honey Chicken has generated positive feedback from Wall Street. The company plans to continue launching limited-time offerings throughout the year.

Throughput Enhancements

Chipotle's digital makeline and Autocado robot have the potential to improve throughput and operational efficiency. The company plans to implement these technologies in all new locations.