Key Takeaways
- Chipotle Mexican Grill shares fell Wednesday, a day after it missed revenue and same-store sales estimates, and tried to downplay concerns about the effects of possible U.S. tariffs.
- The Mexican fast-casual restaurant chain’s sales got a boost from the addition of 119 new locations in the quarter.
- Chipotle said if the tariffs are put into effect, it would impact cost of sales by 60 basis points.
Shares of Chipotle Mexican Grill (CMG) slipped Wednesday, a day after the Mexican fast-casual restaurant chain missed revenue estimates as it tried to address investor concerns about possible tariffs on imports from Mexico.
Chipotle reported fourth-quarter revenue rose 13% to $2.85 billion, a tick below Visible Alpha estimates. Comparable restaurant sales growth of 5.4% was also less than expected. Adjusted earnings per share (EPS) came in at $0.25, in line with forecasts.
The company explained that the revenue gains came through the addition of 119 new restaurants, helping increase transactions by 4.0%. Chipotle also had a 1.4% rise in average check.
Chipotle sees full-year comparable restaurant sales to be in the low- to mid-single-digit range, while the Visible Alpha estimate was for 3.76%.
CFO Says Tariffs Would Have 60-Basis-Point Impact on Cost of Sales
CFO Adam Rymer said on the earnings call that the company anticipates 2025 cost of sales “to be in the high 29% range” because of higher prices for food, especially avocados and chicken, according to a transcript provided by AlphaSense. Rymer added that if the proposed 25% tariffs on goods from Mexico and Canada and a 10% levy on imports from China are implemented, “it would have an ongoing impact of about 60 basis points on our cost of sales.”
Rymer said the outlook doesn’t take into account the potential tariffs. However, he noted that Chipotle only “sourced about 2% of our sales from Mexico, which includes avocados, tomatoes, limes and peppers. And less than 0.5% of our sales from Canada and China.”
Despite today’s decline of more than 2%, Chipotle Mexican Grill shares are up about 17% in the last year.
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