Chipotle Battles Slumping Sales, Analyst Pin Hope On Honey Chicken

Chipotle Mexican Grill Inc (NYSE:CMG) reported first-quarter FY25 earnings on Wednesday after market close.

The following are the comments from two different analysts on the fast-casual restaurant chain’s performance:

• Goldman Sachs analyst Christine Cho reiterated a Buy rating on the shares and lowered the price forecast from $62 to $57.
• Bank of America Securities analyst Sara Senatore reiterated a Buy rating on the shares with a price forecast of $64.

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Goldman Sachs: Chipotle's first-quarter 2025 results came in close to expectations, with adjusted earnings of 29 cents versus consensus estimates of 28 cents.

Traffic fell more than anticipated at -2.3%. This contributed to a slowdown as same-store sales growth declined 0.4% compared to a 5.4% gain in the prior quarter.

Total revenue of $2.88 billion missed projections by 2–4%, despite steady new store openings. Margins slightly outperformed expectations, with restaurant-level margin at 26.2% and EBITDA margin at 20.1%.

Management struck a cautious tone. Traffic, they warn, may stay negative through the first half of the year due to consumer spending uncertainty.

Chipotle has revised its estimates on the impact of recent tariffs. The company now expects a 20 basis point cost hit in the second quarter, mainly due to existing inventory.

The ongoing effect on the cost of sales is projected at 50 basis points. That’s down from the 60 basis points forecast in February. Guidance does not include potential effects from delayed tariffs or the 25% duties on imports from Mexico and Canada.

Despite near-term pressure, the analyst remains optimistic long-term. Growth initiatives such as the Chipotle Honey Chicken limited-time offer, stronger marketing efforts, and operational upgrades should help, analysts noted.

Bank of America: Chipotle's same-store sales growth (SSSG) of -0.4% in the first-quarter fell short of expectations, though the analyst suggests calendar shifts and weather may have masked steadier underlying trends.

Encouragingly, a pickup in the two-year growth rate from March to April signals potential momentum. The BofA analyst also expects improved sales ahead, driven by easier year-over-year comparisons, strong performance from limited-time offers like honey chicken, and increased ad spending.

Analysts expect upcoming tariffs to weigh on margins by 20 basis points in the second quarter and 50 basis points for the full year. Efficiencies from prior portion investments and operational upgrades like new kitchen equipment should counterbalance these pressures.

Price Action: CMG shares traded higher by 0.79% at $49.15 at last check Thursday.

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