NEWPORT BEACH, CALIF. — Despite an increase in first-quarter revenue compared to the same period last year, Chipotle Mexican Grill has seen a drop in comparable sales at its restaurants, which the company attributes to a continued slowdown in consumer spending.
“In February, we began to see that the elevated level of uncertainty felt by consumers is starting to impact their spending habits,” said Scott Boatwright, chief executive officer, Chipotle. “We could see this in our visitation study where saving money because of concerns around the economy was the overwhelming reason consumers were reducing the frequency of restaurant visits.
“This drove a slowdown in our underlying transaction trends. This trend has continued into April. While we can't predict how long these consumer headwinds will last, what I do know is the Chipotle brand has never been stronger, and that we have an extraordinary value proposition that is more important than ever to focus on being guest-obsessed to earn every transaction.”
Net income in the first quarter ended March 31 was $387 million, equal to 28¢ per share on the common stock, up 7.8% from $359 million the year prior, or 26¢ per share. Total first-quarter revenue was $2.9 billion, a 6.4% increase compared with $2.7 billion last year.
Comparable restaurant sales declined 0.4% versus the same period last year. The decline comes after Chipotle reported a 2024 fourth-quarter comp sales increase of 5.4%, and a full-year comp sales increase of 7.4%. Added to that, first-quarter restaurant operating costs related to food, beverage and packaging increased from $779 million last year to $838 million this year. Digital sales accounted for 35% of total food and beverage revenue, compared with 36% in the first quarter last year.
Digital orders made up 35% of Chipotle’s first-quarter sales, compared to 36% last year.
| Photo: ©MARIAKRAY – STOCK.ADOBE.COM“As we look to Q2, we are facing our most challenging comparison as we lap an 11.2% comp from last year, including a high-teens comp (last) April,” said Adam Rymer, chief financial officer, Chipotle. “For Q2, we expect our cost of sales to be in the high 29% range as the mixed benefit from (recent limited-time offer) Chipotle Honey Chicken will be more than offset by higher inflation across several items, the normalization of avocado prices, and the impact of the newly enacted tariffs, including aluminum and the broad-based 10% tariff. We estimate these tariffs will have an ongoing impact of about 50 basis points, and due to inventory on hand, we anticipate a 20-basis-points impact in Q2. These estimates do not include any impact from the tariffs that were postponed, or the 25% tariffs on Mexico and Canada, since our imports fall under the USMCA (United States-Mexico-Canada) exemption.”
Boatwright said in Chipotle’s 2024 year-end earnings call that about 50% of the company’s avocados come from Mexico. The company has diversified its sourcing of avocados in recent years, looking to countries like Colombia and Peru to supply them. Tariffs on aluminum would affect Chipotle’s packaging costs, as well as tariffs on imported beef.
“We get some of our beef from Australia, so that's been impacted as well as packaging from various countries,” Rymer said. “Think about Vietnam, Indonesia, Thailand, areas like that, as well as avocados from Colombia and Peru. And so those categories right there are going to be the majority of that 50 basis points.”
Chipotle opened 57 new restaurants during the first quarter, and the company plans to open between 315 and 345 new stores in 2025, with 80% of them having a Chipotlane drive-thru. Rymer mentioned that construction costs are something the company is monitoring, due to tariffs and potential tariffs on building supplies.
“When it comes to new restaurant builds … everything from lumber to shelving to some of the other items, especially the items that come from China,” he said. “We’re going to continue to really understand how we can mitigate those costs, but those are the main categories when it comes to cost of sales.”
Labor and 2025 outlook
Labor costs in the first quarter were 25% of total revenue, an increase from 24.4% in the first quarter last year. The company attributed the rise to lower sales volumes combined with wage inflation, including minimum wage increases in California.
Boatwright said a renewed focus on hospitality and maximizing personnel usage is a key focus for 2025. In addition to an updated training program, Chipotle is rolling out new labor-saving kitchen equipment to maximize staff usage where they’re needed most, like wrapping burritos or interacting directly with customers.
“We remain on track to have produce slicers in all restaurants by this summer, which will improve the speed of prep and improve the culinary by ensuring consistent cut sizes for onions, bell peppers, and jalapeños,” he said. “We are also expanding the rollout of our equipment package, which includes a dual-sided plancha, three-pan rice cooker and a high-capacity fryer. We are now in the process of rolling out the equipment package to an additional 100 existing restaurants over the next few months. Based on the results, we can accelerate the rollout to all restaurants, which we believe we can complete over the next several years.”
Boatwright added that the company is also making progress with two labor-saving, customized equipment pieces: the autocado, which can cut, core and peel an avocado in 26 seconds before being hand-mashed to make guacamole; and the digital makeline, which automatically builds and fills bowl and salad orders, freeing up staff to perform other tasks. Both pieces of equipment were co-developed by Chipotle, and are currently in the development phase, including some in-restaurant testing.
In March, Chipotle launched a limited-time offer of Chipotle Honey Chicken as a protein option. Boatwright said the promotion, “had a higher mix than any other limited-time offer, even surpassing its two market pilot tests. It is also driving incremental transactions, and the guest feedback has been overwhelmingly positive. I am confident this will be another successful LTO to bring back in the future.”
The company also plans to focus more on its catering program in 2025.
Chipotle plans to open between 315 and 345 new stores in 2025, with 80% of them having a Chipotlane drive-thru.
| Photo: ©JETCITYIMAGE – STOCK.ADOBE.COM“Today, catering is only about 1.5% of sales with little or no marketing,” Boatwright said. “Yet, it is one of the best experiences at Chipotle. We have developed a plan to scale the business and we’ll roll out a catering test this fall in one of our sub-regions. Our tests will include the new equipment package, additional storage, as well as new technology to best allocate orders and drive demand. We can then see if it allows us to effectively scale the catering business without impacting our core business. We will share our learnings along the way.”
Looking ahead to the rest of 2025, Chipotle projects low-single-digit, full-year comparable sales, and a return to positive transaction growth in the second half of the year.
“We also have several near-term initiatives that I am confident will accelerate this trend,” Boatwright said. “During these uncertain economic times, our objective is to invest in the things that make Chipotle a special brand. Our people, our culinary, our value proposition, innovation, and our growth. By doing so, we expect that our brand and our business will be even stronger when the economic headwinds subside.”
