Chipotle’s Comparable Store Sales Growth Impresses

Image: Chipotle’s stock has done quite well since the beginning of 2023.

By Brian Nelson, CFA

On July 24, Chipotle (CMG) reported better-than-expected second quarter results with both revenue and non-GAAP earnings per share coming in above the consensus forecast. Total revenue increased an impressive 18.2%, while comparable store sales leapt 11.1%. Higher transactions of 8.7% and a 2.4% increase in average check drove the comp increase. Digital sales accounted for 35.3% of total food and beverage revenue in the quarter.

Chipotle’s operating margin was 19.7%, an increase from 17.2% in last year’s quarter, while its restaurant level operating margin advanced 140 basis points, to 28.9%. Last year’s menu price increases offset inflation of avocados, increased oil usage and higher incidence of beef given the success of its Braised Beef Barbacoa marketing efforts.

Adjusted diluted earnings per share came in at $0.34, a 36% jump from the $0.25 mark in the year-ago period. Chipotle opened 52 new company-owned restaurants in the quarter with 46 having a Chipotlane drive thru. The company recently implemented a 50-to-1 stock split and repurchased $151.4 million of stock during the second quarter. At the end of the quarter, it still had $647.7 million available under its share repurchase program. 

Looking to 2024, Chipotle’s full year comparable restaurant sales growth is expected in the mid to high-single digit range, while the firm expects to open a total of 285 to 315 new restaurant openings in the year with over 80% having a Chipotlane drive thru. We liked Chipotle’s second quarter results, especially the pace of its comparable store sales increase, and the firm remains a key idea in the portfolio of the Best Ideas Newsletter.