Local restaurant chains ushered in February with news of end-of-the-year financials, record-breaking profit and new markets.
Analysts Consider Chipotle Forecast “Conservative”
Chipotle Mexican Grill Inc. (NYSE: CMG) maintained its reputable double-digit sales growth in the fourth quarter as the Newport Beach-based chain reported revenue of $2.8 billion, a 13% increase compared to the same quarter of 2023. Revenue was driven by comparable restaurant sales rising 5.4%, a key metric that shows a restaurant chain’s financial health.
Chief Executive Scott Boatwright, who replaced Brian Niccol last year when he left for Starbucks, said 2024 marked a year of milestones that included growing transactions over 5%, surpassing $3.2 million in AUV, reaching 1,000 Chipotlanes and opening the brand’s first restaurants in the Middle East and “making tremendous progress in Europe.”
Company leaders forecast comparable restaurant sales growth in the low to mid-single digit range for 2025 and a range of 315 to 345 new stores.
Analysts believed these expectations were conservative.
Wedbush Securities’ analyst Nick Setyan pointed out that the guidance doesn’t include any possible growth benefits in the next couple of quarters, such as limited time menu offers or incremental pricing. In turn, the firm lowered its same-store sales (SSS) growth estimates for the first and second quarters of 2025.
“Conservative SSS growth guidance/commentary meaningfully lowers what was a high bar, but drivers of outperformance versus a now-lowered hurdle exist starting with Q2,” Setyan wrote in a note to investors.
He added that Chipotle’s 2025 forecast for new restaurants openings “could prove conservative” as well.
“111 net new units were opened in Q4, below our estimate of 120,” Setyan said, maintaining Wedbush’s 2025 net openings estimate of 317.
Setyan also noted that Chipotle said its “tariff exposure is relatively small, ~60 bp of potential margin pressure we suspect would be covered by pricing.”
Boatwright said about 50% of Chipotle’s avocado supply comes from Mexico while also sourcing from Colombia, Peru and the Dominican Republic.
Restaurants analyst Brian Vaccaro from Raymond James lowered the target price for Chipotle from $69 to $66 on Feb. 5, citing similar concerns about the company’s caution.
Vaccaro wrote that Raymond James remains optimistic about incoming initiatives, which Chipotle leaders mentioned on the recent earnings call, that can “drive ops/margin efficiencies over time.”
“Management emphasized modernizing its back of house remains a priority with a new suite of equipment rolling to new units starting later this year,” he said. This includes produce slicers, dual-sided planchas, new rice cookers and dual-backed fryers.
Boatwright called it “one of the important unlocks” for 2025.
Taco Bell Hits $1B in Operating Profit
Irvine’s Taco Bell hit a notable milestone in 2024 – parent organization Yum! Brands Inc. (NYSE: YUM) reported that the taco chain jumped 11% to $1 billion in operating profit for the first time.
Yum! CEO David Gibbs said that Taco Bell “accounts for 37% of our divisional operating profit” on the earnings call from Feb. 6.
Taco Bell system sales grew 14% to $5.6 billion in the U.S. The company, led by CEO Sean Tresvant, closed out 2024 with 8,757 global locations.
“Taco Bell U.S. delivered an incredibly strong year and one that significantly outperformed the industry, showing clearly that Taco Bell is a category of one brand,” Gibbs said.
