CHIPOTLE MEXICAN GRILL INC Q1 FY2025 earnings call

• Headwinds: First quarter results impacted by weather and consumer spending slowdown. • Chipotle Honey Chicken: Off to a terrific start driving incremental transactions. • Five key strategies: Running successful restaurants, amplifying technology/innovation, making brand visible/loved, sustaining people leadership, expanding access. • Restaurant focus: Value proposition rooted in exceptional people, delicious food, fast throughput, and affordable price. • Technology/innovation: Testing and rolling out produce slicer, equipment package, Avocado, and augmented digital make site. • Marketing: Chipotle Honey Chicken LTO off to strong start; enhanced summer marketing plan; rethinking catering. • People: Industry-leading benefits, growth opportunities; recognized as one of world's most admired companies. • Expansion: On track to open 315-345 new restaurants in 2025; strong new restaurant economics; expansion in Middle East and Mexico with new partnerships.

Sales grew over 6% to reach $2.9 billion, including a comparable sales decline of 0.4%. Digital sales represented 35.4% of sales. Restaurant-level margin was 26.2%, a decrease of 130 basis points year over year. Adjusted diluted earnings per share was $0.29, representing 7% growth over last year. 57 new restaurants were opened, including 48 Chipotle lanes.

• Current underlying trends: Low single-digit full-year comp and positive transaction growth in second half. • Q2 outlook: Facing challenging comps but expects comps to turn positive exiting Q2; cost of sales expected in high 29% range; G&A expected to step up with investments; balance sheet strong with $2.1 billion in cash, restricted cash, and investments; board authorized additional $400 million to share purchase authorization.

• Consumer spending trends: Elevated uncertainty impacting consumer spending habits. • Tariffs: Impact on cost of sales and new store CapEx, with ongoing impact of about 50 basis points from tariffs. • Competition: Fast-casual competitors replicating playbook, but Chipotle confident in value proposition. • Operational execution: Ensuring prep on time and throughput at peak, potential challenges with back-of-house equipment rollout.

Q: Andrew Charles asked about confidence in fast-casual competition not impeding positive traffic in back half of year.

A: Scott Boatwright said Chipotle's extraordinary value proposition, speed, and strong brand give confidence; Adam Rymer added fast-casual is still small in restaurant space and Chipotle builds many new restaurants.

Q: Andrew Charles followed up on tariffs and new store CapEx.

A: Adam Rymer said tariffs on new store builds are in flux, expected to be mid-single-digit increase but somewhat minimal.

Q: Sara Senatore asked about consumer slowdown vs Chipotle-specific issues.

A: Scott Boatwright said brand is strong with good KPIs; Adam Rymer said trend is primarily macro-related.

Q: David Tarantino asked about diagnosing slowdown as macro vs Chipotle-specific.

A: Scott Boatwright said brand is strong with good internal metrics; Adam Rymer said two-year comp trend supports macro view.

Q: David Palmer asked about consumer trading to other players and Honey Chicken.

A: Scott Boatwright said Chipotle gaining share across QSR and Fast Casual; Adam Rymer said Honey Chicken driving transactions despite Easter shift.

Q: Sharon Zackfia asked about digital sales and rewards program.

A: Scott Boatwright said more can be done in digital, with marketplace holding up but white label seeing deterioration.

Q: Brian Harbour asked about lunch vs dinner trends and equipment package impact.

A: Adam Rymer said dinner holding up better than lunch; Scott Boatwright said equipment package benefits are early but ballparked savings.

Q: Dennis Geiger asked about lunch vs dinner and impact of initiatives.

A: Scott Boatwright said consumer flywheel drives initiatives; Adam Rymer said dinner holding up better.

Q: Gregory Francfort asked about equipment sourcing and margin impact.

A: Scott Boatwright said equipment mostly US-made with component parts subject to tariffs; Adam Rymer said early thoughts on margin benefits but magnitude not definitive.

Q: Christine Cho asked about international markets and comp guide.

A: Scott Boatwright said Canada and Europe performing well; Adam Rymer said comp guide depends on macro and initiative performance.

Q: Lauren Silberman asked about unit growth and cannibalization.

A: Adam Rymer said unit growth impact on comps is in 80-100 basis point range.

Q: John Tower asked about LTO cadence and hospitality investment.

A: Scott Boatwright said potential for three LTOs; hospitality investment related to deploying additional people for throughput.