Chipotle Mexican Grill on Wednesday reported weaker-than-expected quarterly income after its same-store gross sales declined for the primary time since 2020.
Executives cited each a slowdown in shopper spending and opposed climate as two of the elements that dampened demand for its burritos and bowls.
The corporate additionally lowered the highest finish of its outlook for full-year same-store gross sales progress.
Chipotle shares fell greater than 2% in prolonged buying and selling. The inventory closed up 3.5% earlier on Wednesday.
Here is what the corporate reported in contrast with what Wall Avenue was anticipating, primarily based on a survey of analysts by LSEG:
- Earnings per share: 29 cents adjusted vs. 28 cents anticipated
- Income: $2.88 billion vs. $2.95 billion anticipated
Internet gross sales rose 6.4% to $2.88 billion.
The chain’s same-store gross sales fell 0.4% throughout the quarter, in need of the 1.7% progress projected by StreetAccount estimates. Restaurant transactions fell 2.3% and had been solely partially offset by a 1.9% improve in common test.
Clients began pulling again their spending in February due to financial uncertainty, CEO Scott Boatwright instructed analysts on the corporate’s convention name.
“We may see this in our visitation examine, the place saving cash due to issues across the financial system was the overwhelming purpose customers had been decreasing the frequency of restaurant visits,” he mentioned, including that the visitors slowdown has continued into April.
The spring months sometimes kick off what Chipotle calls “burrito season” — the busiest time of the yr for the chain, from Easter by means of Could. However the vacation landed a number of weeks later this yr, delaying the same old seasonal improve in demand, though the limited-time launch of its chipotle honey hen helped gross sales in March.
Chipotle’s gross sales often sluggish throughout the summer season months as faculty college students return residence and many shoppers journey internationally.
The corporate doesn’t count on visitors to its eating places to develop till the second half of the yr.
“I’m assured that we’ve got a robust plan to return to optimistic transaction comps by the second half of the yr, and through these unsure instances, we are going to proceed to spend money on the issues that make Chipotle a particular model — our folks, culinary, worth proposition, innovation and progress,” Boatwright mentioned in an announcement.
For the total yr, Chipotle is now projecting same-store gross sales will develop by low single digits. Beforehand, it was forecasting same-store gross sales progress within the low- to mid-single-digit vary.
“Wanting ahead, our advertising and marketing crew has an enhanced plan for this summer season and the rest of the yr to make Chipotle extra seen, extra related and extra liked,” Boatwright mentioned.
Chipotle can also be projecting increased inflation within the second quarter, fueled by the White Home’s tariffs on aluminum and a broad 10% import responsibility. Roughly half the corporate’s avocado provide comes from exterior of Mexico, for instance.
Chipotle Chief Monetary Officer Adam Rymer estimated that tariffs will add 50 foundation factors, or 0.5%, to its value of gross sales on an ongoing foundation. Within the second quarter, the tariffs are anticipated to hit its value of gross sales by 20 foundation factors, or 0.2%, as a result of firm’s stock earlier than the duties had been carried out.
“These estimates don’t embrace any impression from the tariffs that had been postponed, or the 25% tariffs on Mexico and Canada since our imports fall underneath the [U.S.-Mexico-Canada Agreement] exemption,” Rymer mentioned.
The corporate reiterated its plans to open between 315 and 345 new eating places by the top of 2025.
Chipotle reported first-quarter internet earnings of $386.6 million, or 28 cents per share, up from $359.3 million, or 26 cents per share, a yr earlier.
Excluding stock-based compensation grants tied to its current CEO transition, the corporate earned 29 cents per share.
