Chipotle’s Same Restaurant Sales Growth Continues to Shine

Image Source: Valuentum

By Brian Nelson, CFA

On April 24, Chipotle (CMG) reported excellent first-quarter 2024 results. Total revenue increased 14.1% thanks to comparable restaurant sales growth of 7%, higher transactions and an increase in the average check. Its operating margin came in at 16.3%, which was a nice bump from the 15.5% from last year’s quarter. Chipotle’s restaurant level operating margin also improved nicely by 190 basis points, to 27.5%. Adjusted diluted earnings per share came in at $13.37, which was an increase from the $10.50 mark it achieved in the same period a year ago. During the quarter, it opened 47 new restaurants with 43 of them including a Chipotlane drive thru.

Management had the following to say about the quarter:

We had another outstanding quarter driven by our improvement in throughput and successful marketing initiatives, including Braised Beef Barbacoa and Chicken Al Pastor, which drove strong sales and transactions. The results we are seeing from our focus on developing exceptional people, preparing delicious food and fast throughput gives me confidence that we can achieve our long-term target of more than doubling our business in North America and expanding internationally. 

Looking forward toward the balance of 2024, full-year comparable restaurant sales growth is targeted in the mid to high-single digit range, while management expects to open 285 to 315 new restaurants during the year on a net basis with over 80% of them having a Chipotlane. Management continues to buy back stock, and investors continue to wait for 50 for 1 stock split. We liked the quarterly report from Chipotle and remain huge fans of its long-term restaurant unit growth story. We also like the levers that Chipotle can pull to drive same restaurant sales growth, not only in pricing actions and building out Chipotlanes but also via long-term potential upside in the valuable breakfast daypart, an area that Chipotle has yet to tap.