Chipotle slides after rare negative comparable sales quarter; restaurant peers on watch

Chipotle Mexican Grill (NYSE:CMG) fell sharply in after-hours trading on Wednesday after missing revenue estimates with its Q2 earnings report.

A 3.0% increase in total revenue was driven by new restaurant openings, as comparable sales fell 4.0% during the quarter that ended on June 30. The comparable sales growth mark fell below the consensus estimate of -2.9%. Transactions were down 4.9% during the quarter. Notably, Chipotle (NYSE:CMG) lapped its strongest comparable sales quarterly mark of 2024 and had an additional headwind due to the timing of Easter.

Digital sales represented 35.5% of total food and beverage revenue during the quarter.

Restaurant-level margin was down 150 basis points year-over-year to 27.4% of sales during the quarter to edge past the consensus estimate of 27.1%.

Food, beverage, and packaging costs were 28.9% of sales vs. 29.4% a year ago. The decrease was primarily due to the benefit of menu price increases in 2024 and from cost of sales efficiencies. The decrease was partially offset by inflation across several ingredient costs, primarily steak and chicken. Labor costs as a percentage of sales moved 60 basis points higher to 24.7%.

Chipotle (CMG) opened 61 new company-owned restaurants during the quarter, of which 47 included a Chipotlane. Chipotle (CMG) sees full-year restaurant growth of 315 to 345 units, with over 80% having a Chipotlane.

“We are seeing momentum build as we rolled out our summer marketing initiatives and as our comparisons ease,” stated CEO Scott Boatwright.

Looking ahead, Chipotle (CMG) sees flat comparable restaurant sales growth for the full year.

Shares of the Newport Beach-based company were down 8.6% in after-hours trading after gaining 1.1% during the regular session. Noodles (NDLS), Shake Shack (SHAK), CAVA Group (CAVA), Yum! Brands (YUM) and McDonald’s (MCD) are some of the restaurant stocks that tend to move along with CMG on earnings day.