TLDR
- Chipotle beat Q1 earnings estimates at $0.29 per share but missed revenue forecasts
- Revenue grew 6.4% year-over-year to $2.88 billion, though comparable sales decreased 0.4%
- Customer transactions dropped 2.3%, marking the first year-over-year decline since 2020
- Operating margin improved to 16.7%, demonstrating solid cost control despite rising food prices
- Analysts maintain mostly positive outlook with average price target of $61.76 (26.66% upside)
Chipotle Mexican Grill reported a mixed bag for its first quarter 2025 earnings, beating profit expectations while falling short on revenue targets. The Mexican food chain delivered quarterly earnings of $0.29 per share, exceeding the consensus estimate of $0.28 and improving from $0.27 per share a year ago.
Revenue reached $2.88 billion for the quarter ended March 2025, representing a 6.4% increase from $2.7 billion in the same period last year. However, this figure missed analysts’ expectations by 1.49%.
The earnings surprise of 3.57% continues Chipotle’s streak of surpassing consensus EPS estimates, which it has accomplished in each of the last four quarters. This marks the fourth consecutive quarter of earnings beats.
Customer traffic showed concerning weakness with transactions dropping 2.3%, particularly in February and April. Comparable sales slipped by 0.4%, representing the first year-over-year decline since 2020.
While average check size increased by 1.9%, it wasn’t enough to offset the decline in customer volume. This traffic dip comes as consumers appear to be pulling back on restaurant spending.
Expansion Continues Despite Headwinds
Despite challenges in same-store sales, Chipotle maintained its aggressive expansion strategy. The company opened 57 new restaurants during the quarter, with 48 of those locations featuring “Chipotlanes” – drive-thru lanes designed specifically for mobile orders.
Digital sales remained strong, accounting for 35.4% of total sales, showing the company’s continued success in its digital transformation efforts.
For the full year 2025, Chipotle plans to open between 315 and 345 new restaurants, demonstrating confidence in its long-term growth strategy despite short-term headwinds.
The company’s financial position remains robust with $2.1 billion in cash and zero debt. This strong balance sheet allowed Chipotle to repurchase $554 million worth of shares in the first quarter alone.
Profitability Strength Amid Rising Costs
One bright spot in Chipotle’s earnings report was its profitability metrics. Despite facing cost pressures from rising prices for key ingredients like avocados, dairy, and chicken, the company managed to improve its operating margin to 16.7%, up 40 basis points from last year.
This margin improvement demonstrates Chipotle’s effective cost control measures and operational efficiency. The 7% year-over-year increase in earnings per share further highlights the company’s ability to grow profits despite challenging conditions.
Looking ahead, Chipotle faces additional cost pressures, including new tariffs on materials like aluminum that are expected to increase costs by another 50 basis points. The second quarter also presents challenges with tough year-over-year comparisons and some pricing roll-offs.
To combat these challenges, Chipotle is implementing operational improvements such as new produce slicers to reduce prep time and waste. The company is also planning marketing initiatives, including the Chipotle Honey Chicken limited-time offering, to boost transaction volumes later in 2025.
Wall Street’s Take
Analyst reactions to Chipotle’s earnings were mixed but generally maintained a positive outlook. While many analysts kept their ratings steady, several trimmed their price targets in response to the revenue miss and traffic concerns.
Stifel and Bank of America reiterated Buy ratings with price targets between $64 and $65, suggesting upside potential of more than 30%. TD Cowen, Truist, and Wells Fargo also maintained Buy ratings but lowered their targets to the $57-$64 range, citing macroeconomic pressures and the comp sales decline.
Guggenheim took a more cautious approach, lowering its target to $48 and maintaining a Hold rating. Barclays and Stephens also reduced their targets while keeping Hold ratings, suggesting investors should be patient rather than panicked.
Overall, Chipotle is considered a Strong Buy on Wall Street, with an average price target of $61.76, representing a potential upside of 26.66% from current levels.
Chipotle shares have struggled so far in 2025, losing approximately 21.9% since the beginning of the year. This performance lags behind the S&P 500, which has declined by 10.1% during the same period.
The stock showed some positive momentum following the earnings announcement, rising 3.52% in yesterday’s trading. However, pre-market activity suggests investor uncertainty with the stock indicating a decline of over 3%.
For investors considering Chipotle, the key question is whether the company’s expansion plans and operational improvements can reignite growth later this year. Until then, the stock may experience continued volatility as the market digests the mixed earnings results.
The current consensus EPS estimate for the coming quarter stands at $0.36 on projected revenues of $3.24 billion. For the full fiscal year 2025, analysts expect earnings of $1.26 per share on revenues of $12.52 billion.
Chipotle’s performance remains closely tied to consumer spending patterns and food inflation trends. As these factors evolve throughout 2025, investors will be watching to see if customer traffic begins to recover and whether the company can maintain its margin improvements.
