Chipotle Q3 Earnings Beat, Revenues Lag Estimates, Stock Down

Core Insights - Chipotle Mexican Grill, Inc. (CMG) reported third-quarter 2025 results with earnings exceeding expectations while revenues fell short of estimates, both metrics showing year-over-year growth [1][3][9] Financial Performance - Adjusted earnings per share (EPS) for Q3 2025 were 29 cents, surpassing the Zacks Consensus Estimate of 28 cents, and reflecting a 7.4% increase from 27 cents in the same quarter last year [3][9] - Quarterly revenues reached $3 billion, missing the consensus estimate of $3.02 billion by 0.5%, but showing a 7.5% year-over-year increase driven by new restaurant openings and higher comparable restaurant sales [3][9] Comparable Sales and Traffic Trends - Comparable restaurant sales rose by 0.3% in Q3 2025, a significant decline from the 6% growth reported in the prior-year quarter, influenced by a 1.1% increase in average check but offset by a 0.8% decrease in transactions [4][9] - Digital sales accounted for 36.7% of total food and beverage revenues during the quarter [4] Restaurant Openings - Chipotle opened 84 company-owned restaurants in Q3 2025, with 64 of these featuring a Chipotlane, contributing positively to the company's performance [5] Cost and Margin Analysis - Food, beverage, and packaging costs as a percentage of revenues were 30%, down from 30.6% in the prior-year quarter, attributed to menu price increases and improved cost efficiencies, though inflation in beef and chicken and new tariffs partially offset these gains [6] - The restaurant-level operating margin decreased to 24.5% from 25.5% in the prior-year period, with adjusted net income for the quarter at $389.9 million, up from $366.6 million year-over-year [7][9] Balance Sheet Overview - As of September 30, 2025, Chipotle reported cash and cash equivalents of $698.7 million, down from $748.5 million at the end of 2024, with inventory totaling $46.4 million compared to $48.9 million at the end of 2024 [8] Future Outlook - For 2025, management anticipates comparable sales to decline in the low-single digit range, a revision from the previous estimate of flat sales, and plans to open between 315 and 345 new company-operated restaurants, with over 80% featuring a Chipotlane [10]