Chipotle Q2 Earnings: Revenue Up 3%, Same-Store Sales Down 4%

Chipotle reported Q2 2025 revenue of $3.1bn, up 3% YoY, driven by new restaurant additions. Same-store sales declined 4% YoY, marking the second straight quarter of flat sales. The burrito chain's earnings have been flatlining despite a significant increase in the number of restaurants.

Chipotle Mexican Grill (NYSE: CMG) reported its Q2 2025 financial results, revealing mixed performance that has investors concerned. The company reported revenue of $3.1 billion, up 3% year-over-year (YoY), driven largely by the addition of 61 new restaurants, bringing the total to approximately 3,839 units [1]. However, same-store sales declined by 4% YoY, marking the second consecutive quarter of flat sales. This decline has raised questions about the company's ability to maintain growth momentum.

The company's net income was $436 million, down 4.4% from the same period last year. Labor costs rose slightly to 24.7% of revenue, up from 24.1% in the prior-year quarter, as softer volume offset wage inflation [1]. Despite the challenges, management expects flat comparable-restaurant sales for the full year 2025 and plans to open between 315 and 345 new restaurants, aiming to double the chain to over 7,000 locations in the long term [1].

Chipotle's stock price has been volatile following the earnings release. The stock tanked ~10% in after-hours trading and has continued to drift downward since. The recent slowdown in sales growth is concerning, and the company's valuation remains high, with a trailing 12-month price-to-earnings (P/E) ratio of around 42x [1]. This valuation is significantly higher than peers such as Domino's Pizza (28x P/E) and McDonald's (26x P/E) [1].

The company's stock price assumes a relatively smooth recovery in same-store sales and continued high-margin growth. However, the current macroeconomic environment and increased competition in the sector pose risks to Chipotle's growth prospects. Unless comparable-store trends improve and the company successfully executes its plans, the stock's high multiples make it vulnerable to further share price deterioration or even a sudden crash [1].

References:
[1] https://seekingalpha.com/article/4807173-chipotle-stock-42x-earnings-for-a-flatlining-burrito-shop
[2] https://finance.yahoo.com/news/chipotle-mexican-grill-second-quarter-130239964.html