Newport Beach, California-based Chipotle Mexican Grill, Inc. (CMG) operates quick-casual and fresh Mexican food restaurant chains. Its offerings include burritos, quesadillas, tacos, salads, and more. With a market cap of $54.9 billion, Chipotle’s operations span the U.S., Canada, France, Germany, Dubai, and the U.K. The restaurant giant is gearing up to announce its third-quarter results after the markets close on Wednesday, Oct. 29. Ahead of the event, analysts expect CMG to deliver an EPS of $0.29, up ...

Chipotle Mexican Grill, Inc. (NYSE:CMG) is one of the noteworthy Q3 stocks Jim Cramer was focused on. Highlighting losers that could make a comeback, Cramer mentioned the stock and said: “And how about the biggest losers for the quarter? As I scrutinize the list, I see a couple that could make a comeback. Chipotle’s the best of these losers, having been hammered relentlessly like many other restaurant chains. The current numbers are indeed nothing to write home about, but this company has a habit of bounc ...

Financial Data and Key Metrics Changes - For Q1 2025, total revenue was $119.2 million, up from $116.2 million in Q1 2024, representing a year-over-year increase of 2.6% [21] - Company-operated restaurant revenue increased by 1.2% to $98.4 million from $97.2 million in the same period last year, driven by a 0.6% increase in comparable restaurant sales [21][22] - GAAP net income for Q1 2025 was $5.5 million, or $0.19 per diluted share, compared to $5.9 million, or $0.19 per diluted share in the prior year [28][29] Business Line Data and Key Metrics Changes - Franchise revenue increased by 16.2% to $13.2 million, driven by IT pass-through revenue related to the franchisee rollout of a new point of sale system [23] - The increase in franchise revenue was partially offset by a 1.3% decrease in comparable restaurant sales [23] Market Data and Key Metrics Changes - System-wide comparable store sales decreased by 1.2% in Q2 to date through April 23, 2025, with a 0.1% decrease in company-operated restaurants and a 1.8% decrease in franchise restaurants [24] Company Strategy and Development Direction - The company is focused on a brand turnaround, emphasizing long-term sustainable growth without shortcuts [5] - Upcoming initiatives include a brand relaunch and menu innovations, such as the launch of Fresca wraps and salads, and quesadillas [6][9] - The company aims to open at least 10 new restaurants in 2025, marking the largest system-wide unit growth since 2022 [16][17] Management Comments on Operating Environment and Future Outlook - Management acknowledged that the first quarter results were underwhelming but expressed confidence in the steps being taken to improve performance [6] - The company expects sequential quarterly acceleration in comparable sales trends in Q3 and Q4, driven by the brand relaunch and new product launches [24] - Management noted that the consumer pullback is real, but they are focused on what they can control, including reinforcing quality and value [35] Other Important Information - Food and paper costs as a percentage of company restaurant sales decreased by 120 basis points year-over-year to 25.2% due to higher menu pricing [24][25] - Labor and related expenses increased by 120 basis points year-over-year to 32.7%, with wage inflation of approximately 12% in Q1 2025 [25][26] - The company expects to remodel between 60 to 70 system-wide restaurants in 2025, with eight already completed [19][30] Q&A Session Summary Question: Expectations for Q2 same store sales - Management indicated that headwinds are expected to continue in Q2, but they are focused on their brand relaunch and menu innovations to drive sales [34][35] Question: Impact of new product launches on comp trends - Management noted that the Mango Habanero product drove initial trial, and they are optimistic about the upcoming launches of Fresca wraps and quesadillas [38][40] Question: Regional differences in consumer behavior - Management observed that the consumer pullback is widespread, affecting various income bands, including the Hispanic consumer [51][52] Question: Menu pricing expectations for the year - Management expects menu pricing to be around 3% for the year, with approximately 2% in Q3 and Q4 [53] Question: Operational gaps identified through consumer feedback - Management is implementing a back-to-basics program to address operational gaps, focusing on accuracy and hospitality [70][72] Question: Kiosk rollout status and benefits - Kiosks are in most company restaurants, with plans to complete the rollout in the remaining locations, and management sees opportunities to enhance guest engagement through kiosks [73][74]

Financial Data and Key Metrics Changes - For Q1 2025, total revenue was $119.2 million, up from $116.2 million in Q1 2024, representing a 1.7% increase [19] - Company-operated restaurant revenue increased by 1.2% to $98.4 million, driven by a 0.6% increase in comparable restaurant sales and additional sales from two new restaurant openings [19] - The effective price increase was approximately 4.4% compared to 2024 [20] - GAAP net income for Q1 2025 was $5.5 million, or $0.19 per diluted share, compared to $5.9 million, or $0.19 per diluted share in the prior year [26] Business Line Data and Key Metrics Changes - Franchise revenue increased by 16.2% to $13.2 million, driven by IT pass-through revenue related to a new point of sale system and new franchise openings [20] - Comparable restaurant sales decreased by 1.3% for franchise-operated restaurants [20] Market Data and Key Metrics Changes - System-wide comparable store sales decreased by 1.2% in Q2 to date, with a 0.1% decrease in company-operated restaurants and a 1.8% decrease in franchise restaurants [21] Company Strategy and Development Direction - The company is focused on a brand turnaround, emphasizing long-term sustainable growth without shortcuts [5] - Upcoming initiatives include a brand relaunch and menu innovations, such as the launch of Fresca wraps and salads, and quesadillas [6][8] - The company aims to open at least 10 new restaurants in 2025, marking the largest system-wide unit growth since 2022 [14][15] - Remodeling efforts are ongoing, with plans to remodel 60 to 70 restaurants in partnership with franchisees [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging consumer environment but remains confident in the brand's long-term potential [6] - The company expects sequential quarterly acceleration in comparable sales trends in Q3 and Q4, driven by the brand relaunch and new product launches [22] - Wage inflation is anticipated to be between 4% to 5% for the year, with Q1 experiencing a 12% increase [23][24] Other Important Information - The company has transitioned to a new distribution partner, which is expected to enhance margins and support future growth [14] - The restaurant contribution margin for Q1 was 16%, down from 17.6% in the previous year, primarily due to labor inflation and occupancy costs [24][25] - General and administrative expenses decreased to 9.5% of total revenue, aided by prior year restructuring costs [26] Q&A Session Summary Question: Expectations for Q2 same store sales - Management noted that consumer pullback is real and expects headwinds to continue into Q2, but is focused on brand relaunch and value innovation [32][33] Question: Impact of new product launches on comp trends - The Mango Habanero product drove initial trial, and upcoming launches of Fresca wraps and quesadillas are expected to attract different consumer segments [36][38] Question: Timing of kitchen equipment rollout and labor cost impact - Equipment rollout is ongoing, with expectations of improved labor efficiency as new systems are implemented [41] Question: Regional differences in consumer behavior - Management observed similar consumer pullback across markets, with particular pressure on the Hispanic consumer segment [50][51] Question: Menu pricing expectations for the year - The company expects menu price increases to be around 3% for the year, with variations across quarters [52] Question: Development pipeline momentum - Management expressed optimism about the development pipeline, with confidence in opening at least 10 new units this year and potential for more in the following year [59][60]

Core Viewpoint - Chipotle Mexican Grill is viewed as a high-potential investment opportunity, particularly following an upgrade from an analyst at Morgan Stanley, who believes the stock is primed for growth in the near future [1][2]. Group 1: Analyst Upgrade - Brian Harbour of Morgan Stanley upgraded Chipotle's shares from equal weight (hold) to overweight (buy) at the beginning of March [2]. - The price target for Chipotle's stock was raised from $65 to $70, indicating a potential share price increase of nearly 30% [2][3]. Group 2: Company Fundamentals - Harbour perceives Chipotle as a structurally sound company, despite recent sales weaknesses impacting its stock price [3]. - The analyst believes that the sales weakness is temporary and expects improvement after the second quarter of the year [4]. - Management is anticipated to enhance fundamentals through appealing products, effective marketing, and improved throughput [4]. Group 3: Automation and Efficiency - The company's adoption of automation is seen as a key driver for sales growth and profit margin improvement through cost savings [4]. - Chipotle's enduring popularity is evidenced by high customer traffic, even in less prominent locations, indicating strong demand for its offerings [5]. - As of the end of 2024, Chipotle operates 3,725 restaurants, showcasing its extensive market presence and investment potential [5].