Here’s our initial take on Chipotle‘s (CMG) financial report.
Key Metrics
| Metric | Q2 2024 | Q2 2025 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $2.97 billion | $3.06 billion | 3% | Missed |
| Earnings per share (adjusted) | $0.34 | $0.33 | (2.9%) | Met |
| Comparable restaurant sales | 11.1% | (4%) | (15.1) pp | n/a |
| Operating margin | 19.7% | 18.2% | (1.5) pp | n/a |
Fewer People Are Going to Chipotle
In the second quarter, Chipotle saw a 3% increase in revenue, which was less than anticipated by analysts, primarily due to the opening of 61 new company-operated restaurants. However, sales at comparable restaurants decreased by 4%, contrasting with a 11% growth during the same period last year. This decrease was mainly attributed to a drop in transactions by 4.9%.
The company’s profitability dipped as well. The adjusted earnings per share decreased slightly, and the operating margin dropped by about 1.5% to reach 18.2%. The decrease in sales volumes and increased costs for certain ingredients had a negative effect, but this was somewhat mitigated by price increases on their menu items.
Chipotle’s CEO, Scott Boatwright, highlighted the positive impact of their summer marketing campaigns, suggesting potential enhancements in the company’s performance. For the entire year, Chipotle anticipates that restaurant sales at established locations will remain relatively stable, indicating a significant growth trend in the latter part of the year.
Immediate Market Reaction
On Wednesday evening, Chipotle’s shares dropped by 11%, as investors expressed disapproval following the company’s failure to meet revenue expectations. Despite the company’s optimistic outlook for the second half of the year, investors seem skeptical about their claims. Prior to releasing the second-quarter report, Chipotle’s stocks had already fallen approximately 12% since the start of the year.
What to Watch
For two consecutive quarters now, Chipotle has fallen short of expectations and adjusted its annual forecast downward. Although a projected flat comparable-restaurant growth rate for the entire year would represent an improvement compared to the second quarter, it is still below the positive low- to mid-single-digit growth that the company previously anticipated.
It’s hard to determine if Chipotle’s sales decline is mainly due to internal problems or external economic factors. Although the company saw a price increase on their menu items, some customers might find these prices too high. With two consecutive quarters of poor performance and reduced forecasts, investors are justified in being cautious about Boatwright’s claims of “momentum.
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2025-07-24 00:22