Chipotle (CMG) will have to fight to impress with more headwinds hitting the restaurant industry.
Wall Street says the burrito chain contended with inclement weather and tough comparisons to its second quarter results, with its chicken al pastor boosting results. It’ll likely report slower, albeit strong, sales growth for its fourth quarter and full-year earnings, which are expected to come out Tuesday after market close.
“The apparent intra-quarter sales growth moderation has occurred just weeks before the announcement of the full-year guidance,” Bernstein restaurant analyst Danilo Gargiulo wrote in a note to clients.
Same-store sales are expected to grow 5.67% for the fourth quarter and 7.43% for the year. Revenue for the quarter is expected to be $2.85 billion, alongside adjusted earnings per share of $0.25.
Average check growth is expected to jump 1.29%, compared to a 2.40% increase in the quarter prior.
This will be the first guidance set under new CEO Scott Boatwright, who reported to former CEO Brian Niccol as chief operations officer since 2017.
Here’s what Wall Street expects from Chipotle’s fourth quarter results, according to Bloomberg consensus estimates, compared to the prior year:
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Adjusted earnings per share: $0.25, compared to $0.21
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Revenue: $2.85 billion, compared to $2.52 billion
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Same-store sales growth: 5.67%, compared to 8.40%
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Average check growth: 1.29%, compared to 1.0%
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Traffic growth: 4.41%, compared to 7.40%
In this report, the potential impact of tariffs is looming in the background. The Trump administration announced a 25% tariff on Mexican imports, set to take effect in about a month’s time.
TD Cowen analyst Andrew Charles estimated that 85% of Chipotle’s avocados are imported from Mexico. Previously, the company said that avocados are sourced from the Dominican Republic, US, Colombia, Peru, Colombia, and Mexico.
Tomatoes are another major import. Charles projects that avocados make up roughly 7% percent to 11% of Chipotle’s cost of goods, but tomatoes only make up low-single digits.
Meanwhile, the potential release of Chipotle Honey Chicken as a limited time offering in March has Wall Street excited. Per Charles, it could provide a 50 basis point tailwind in first quarter 2025, relative to the fourth quarter.
Deutsche Bank analyst Lauren Silberman called “concerns on underlying fundamentals … overblown” in a note to clients
She added that the team expects “strength to continue in 2025, supported by a strong innovation and marketing pipeline” including the Chipotle Honey Chicken.
