Chipotle Mexican Grill Inc. posted a decline in same-store sales for the second consecutive quarter following a drop in foot traffic.
Same-store sales (SSS), a key financial metric, declined 4% during the restaurant company’s second quarter ended June 30 due to a 4.9% decrease in transactions, Chipotle reported on July 23.
The next day shares (NYSE: CMG) dropped 13% to $45.74.
In the previous first quarter, sales fell 0.4% and marked the Newport Beach company’s first SSS decline since 2020.
Before Brian Niccol’s departure last year for Starbucks, Chipotle logged an 11.1% increase in same-store sales for the quarter ended June 30, a year ago. Growth slowed in the following quarters—with same-store sales rising 6% in the third quarter of 2024 and 5.4% in the fourth quarter.
The chain, Orange County’s most valuable public company with a market cap of $58 billion, also reported second quarter revenue of $3.1 billion, up 3% from the same period last year.
Chipotle’s recent single-digit increases in revenue stand out compared to the fast-casual chain’s previous years of reporting double-digit growth in quarterly sales.
To illustrate, the restaurant chain reported a revenue increase of 13% in the fourth and third quarters of 2024, following an 18% jump in the second and a 14% rise in Q1 compared to 2023.
“While we experienced a slowdown in our underlying trend in May, we did see momentum build as we rolled out our summer marketing initiatives and leaned into hospitality,” Chief Executive Scott Boatwright said on the second quarter earnings call. “And exiting the quarter, we returned to positive comp sales and transaction trends which have continued into July.”
While Chipotle reported that same-store traffic returned, the company lowered its 2025 forecast to flat same-store sales for the full year “given the ongoing volatility in our sales trends and the consumer environment,” Chief Financial Officer Adam Rymer said.
Its previous outlook expected growth in the “low single digit range.”
Analysts Alter Expectations on Updated Guidance
Chipotle cutting its full-year forecast caught several analysts’ attention.
“We had hoped for a more upbeat tone around 3Q25 trends, but commentary remained measured, with positive late-June and July trends balanced against the guidance reduction,” Stephens analyst Jim Salera wrote in a July 24 note.
Salera added that Chipotle held “credible long-term drivers” such as improvement plans mentioned on the Q2 earnings call for its back-of-house and catering business.
Boatwright told analysts that Chipotle has completed installing new produce slicers across its restaurants and started rolling out its new high-efficiency equipment package to improve consistency and increase prep efficiency. Chipotle will also begin testing a new catering platform in the fall and plans to ramp up marketing this summer, especially on social channels “to meet our guests where they are,” Boatwright told investors.
“When you layer all these opportunities within the flywheel (of operations), we are confident in getting back to mid-single-digit comps and surpassing $4 million in AUVs longer term,” Boatwright added.
Salera noted that the tech “initiatives are likely to ramp over a multi-year horizon rather than materially impacting near-term performance.”
With regards to same-store sales, Jefferies analyst Andy Barish said “visibility beyond ‘25 is becoming increasingly shrouded in the context of investor skepticism/concerns.”
Shares hit a 52-week low of $42.46 apiece on Aug. 1.
Though Raymond James analysts weren’t as worried about the second quarter’s mixed results and the updated guidance, the firm lowered its price target from $62 to $60.
“As comps normalize, we believe FY26 becomes a critical prove-it year,” Salera from Stephens said.
