Chipotle Turns Cautious on Consumer Sentiment. Is the Stock Still a Long-term Buy?

Geoffrey Seiler, The Motley Fool

Sun, Apr 27, 2025, 11:00 AM 5 min read

After warning during its fourth-quarter conference call that 2025 was off to a tough start in January, fast-casual restaurant chain Chipotle Mexican Grill (NYSE: CMG) found that traffic never really recovered; it reported its first same-store sales decline since 2020, early in the COVID-19 pandemic. The stock largely shrugged off these disappointing results, although as of this writing it's still down more than 18% on the year.

Let's dig into Chipotle's most recent results to see when the company may get back on track, and whether the stock's recent weakness is a buying opportunity.

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After seeing sales fall 2% for the month of January, Chipotle management guided for mostly flat same-store sales for Q1. At the time, it blamed severe weather, the Los Angeles wildfires, and an unfavorable calendar shift (New Year's Day fell on a Wednesday, delaying the return of consumers to their regular routines) for its poor start to the year, but it thought it would begin to see a recovery in February.

However, any recovery it did see didn't last long. The company said in February that it began to see customers reduce the frequency of their visits due to concerns over the economy. It said this elevated level of uncertainty felt by consumers has continued into April.

The restaurant operator isn't looking for a quick recovery. It faces its toughest comparable-restaurant sales of the year in Q2, as its comps soared 11.1% in Q2 of last year. A late Easter, meanwhile, is also expected to have a negative impact on the quarter.

Nonetheless, Chipotle is still predicting same-store growth this year, just a bit lower than its previous forecast. It now sees same-store sales growth in the low single digits for 2025, with traffic turning positive in the second half. Previously, it had forecast low- to mid-single-digit comparable sales growth. The company has an enhanced marketing plan ready for the summer and the rest of the year to help drive traffic.

Management said its value proposition, friendly staff, and clean dining rooms give it a strong competitive advantage during these periods. Having recently been to a few Chipotle restaurants with shockingly unclean dining rooms and overflowing trash cans, I think management had better take a closer look into that last one.

Turning to the results themselves, Chipotle grew its revenue by 6% to $2.88 billion, with adjusted earnings per share (EPS) jumping 7% to $0.29. The analyst consensus compiled by LSEG was for adjusted EPS of $0.28 on revenue of $2.95 billion.