Chipotle's Q4 Earnings: A Mixed Bag, Shares Drop on Cautious Guidance

Chipotle Mexican Grill (CMG) reported its fourth-quarter earnings on Tuesday, with results largely meeting Wall Street estimates. However, shares of the fast-casual restaurant chain fell after hours on conservative guidance for the coming year. Let's dive into the numbers and the outlook.

Chipotle reported revenue of $2.845 billion for the fourth quarter, up 13.1% year over year. Comparable restaurant sales increased 5.4%, driven by higher transactions of 4.0% and a 1.4% increase in average check. Digital sales represented 34.4% of total food and beverage revenue. The company opened 119 new restaurants during the quarter, with 95 including a Chipotlane.

Operating margin was 14.6%, up from 14.4% in the fourth quarter of 2023. Food, beverage, and packaging costs were 30.4% of total revenue, up from 29.7% due to higher ingredient usage, a protein mix shift, and inflation across several items. Labor costs were 25.2% of total revenue, up from 25.0% due to wage inflation and minimum wage increases in California.

For the full year 2024, Chipotle reported revenue of $11.3 billion, up 14.6% year over year. Comparable restaurant sales increased 7.4%, operating margin was 16.9%, and diluted earnings per share was $1.11, up 24.7% from $0.892 in 2023.

Looking ahead, Chipotle expects full-year 2025 comparable restaurant sales growth in the low- to mid-single-digit range. The company plans to open between 315 and 345 new restaurants in 2025, with over 80% including a Chipotlane.



While Chipotle's Q4 earnings largely met Wall Street estimates, the company's cautious guidance for 2025 has investors concerned. The low- to mid-single-digit same-store sales growth outlook is lower than the 5.4% growth analysts expected for the year. Additionally, the company's shares fell after hours on Tuesday, indicating that investors are not satisfied with the guidance.

Chipotle's new CEO, Scott Boatwright, has his work cut out for him. He must navigate the challenges of a changing consumer landscape, rising costs, and competition from other fast-casual chains. To achieve the company's growth targets, Boatwright may need to implement strategic initiatives such as expanding the restaurant footprint, innovating menu offerings, and improving kitchen operations.



In conclusion, Chipotle's Q4 earnings were a mixed bag, with revenue and comparable restaurant sales growth meeting expectations but guidance for 2025 falling short. The company's shares fell on the conservative outlook, indicating that investors are not satisfied with the guidance. As Chipotle looks to the future, Boatwright must implement strategic initiatives to achieve the company's growth targets and maintain its competitive position in the fast-casual restaurant industry.