Chipotle (CMG) missed the mark with its first quarter report as it lowered expectations for 2025.
It’s same-store sales declined 0.4% year over year, the first drop since COVID-19 shut down stores in 2020 Q2. Analysts had expected growth of 1.74%; it had clocked a 7% jump in the same period last year.
Transactions fell 2.3%, the first decline since 2022. That’s compared to the 1.22% drop the Street estimated and a 5.40% jump last year.
Average check size increased 1.9%, though Chipotle announced a 2.7% price increase last fall.
“We talked to consumers broadly about what is causing them to sit on the sideline in this economy, it’s really trying to save money, [and] uncertainty around what’s going on with the global economy.” Chipotle CEO Scott Boatwright told Yahoo Finance in an interview.
“As we dig into specifically what’s going on with the Chipotle consumer, we’re not seeing a loss of customers. What we are seeing is a convenience challenge, meaning we need to build more restaurants as quickly as we can to get to our 7,000 restaurants in North America.”
The burrito chain reported a 6.4% jump in revenue to $2.88 billion, missing expectations of $2.94 billion. Adjusted earnings per share of $0.29 slightly beat estimates of $0.28.
Chipotle’s stock dropped as much as 4% in after-hours trading, before reverting to down 2%.
For fiscal 2025, the company lowered its guidance.
For the full year, the company now expects sales to increase in the low-single-digit range, versus previous guidance of low- to mid-single digits.
Prior to the report, Wall Street expected same-store sales to grow 3.46% for 2025.
“Based on our forecast, we will return to positive transactions in the second half of the year,” Boatwright said. The company plans to increase its digital ad and marketing spend, introduce new sides or a new dip this summer, and provide a new limited-time offering.
CFO Adam Rymer said on its earnings call that “assuming no change in the consumer environment,” the company anticipates same-store sales growth to turn positive and foot traffic to be flat exiting the second quarter.
Shares of Chipotle have dropped 19% in 2025. Prior to the report, it’s been trading around flat in the past month, while McDonald’s (MCD) is up 4.2% and the S&P 500 (^GSPC) slid 5.1%.
Investors are weighing potential risks like exposure to avocado costs, ongoing wage inflation pressure (like the FAST ACT), intense competition, and “economic sensitivity,” per William Blair analyst Sharon Zackfia.
Before the report, Zackfia called 2025 the “tale of two halves,” with the first half lagging on same-store sales growth and margins as it faces headwinds like a later Easter, higher prices, and investments in portion sizes.
Earnings estimate breakdown
Here’s what Chipotle posted for its first quarter results, compared to Bloomberg consensus estimates:
- Adjusted earnings per share: $0.29 versus $0.28
- Revenue: $2.88 billion versus $2.94 billion
- Same-store sales growth: -0.4% versus 1.74%
- Average check growth: 1.9% versus 2.69%
- Transactions: -2.3% versus -1.22%
For now, the immediate impact of tariffs on Chipotle will be how they weigh on consumer sentiments, instead of food costs.
Inflation-weary diners have already been turning to lower-cost options. According to KPMG’s March consumer pulse survey, 26% of respondents were visiting fast food and quick service restaurants more often over the past year, whereas 38% were going to casual dining less often.
Avocados and most produce from Mexico are exempt under the United States-Mexico-Canada agreement. Only 2% of Chipotle’s total sales come from Mexico, including avocados, tomatoes, limes, and peppers.
Mexican tomatoes, which likely make up 1% of Chipotle’s cost of goods, will be subject to a 21% tariff starting July 14.
Less than 0.2% of sales are sourced from Canada and China. TD Cowen’s Andrew Charles said it “presumably” sources paper and packaging from China, in addition to potentially some restaurant equipment. There is currently a 145% tariff on Chinese goods.
Charles said in a note that beef from Australia, Chinese goods, non-Mexican avocados, and Mexican tomatoes “now represent the most significant tariff exposures.” Altogether, he estimates that “worst case” it would lead to an “unmitigated impact of 3.3% cost of goods inflation.”
Rymer said, “We estimate these tariffs will [have an] ongoing impact of about 50 basis points and due to inventory on hand we anticipate a 20 basis point impact in Q2, which is included in our guidance.”
NYSE – Delayed Quote • USD
There are currently 27 Buys, 9 Holds, and 0 Sells on Chipotle’s stock.
Zackfia remains a buyer, “given our belief that the underlying brand appeal remains healthy with potential positive wild cards associated with improved throughput.”
Zackfia said over the next few years, Chipotle could increase from mid-20 orders per peak 15-minute period to the low 30s with better tools and staffing.
Charles also gave a Buy rating.
“We continue to have confidence in Chipotle’s traffic driving ability with the most tangible medium-term driver the continuation of thru-put improvements that we believe is in middle innings,” he wrote, adding that “Chipotle’s value perceptions continue to outperform fast casual peers by a wide margin.”
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at [email protected].
