MW Chipotle is off to a 'rough' start in 2025. Some analysts think it will get better.

By Bill Peters

Chipotle's outlook didn't factor in President Trump's new tariffs. Analysts noted that it also didn't factor in any gains for potential new menu items - like honey chicken.

During Chipotle Mexican Grill Inc.'s fourth-quarter earnings call on Tuesday, executives said 2025 was off to a "rough start" and blamed weather and a stronger 2024 for the uneven results this year. But even as some analysts trimmed their profit forecasts, they expected things to get better for the fast-casual Mexican chain over the spring and summer.

And while Chipotle's $(CMG)$ cautious outlook for the months ahead didn't factor in President Donald Trump's tariffs on Mexico, Canada and China, some analysts noted that it also didn't factor in any gains for potential new menu items - like honey chicken, which consumers liked during a trial run.

The analysts made their assessments after Chipotle on Tuesday said it expects same-store sales to grow in the "low- to mid-single-digit range" this year. That forecast disappointed investors.

Shares were down 2.3% on Wednesday. The stock is up 8.1% over the past 12 months.

BTIG analyst Peter Saleh, in a research note on Wednesday, said he was keeping his buy rating on the stock and that "mid-single-digit" same-store sales growth was still possible this year, as the company rolls out new menu items and focuses on faster order processing.

"That said, we expect the shares to be under near-term pressure as [first-quarter 2025] estimates adjust lower due to poor weather, calendar shifts, and fires in California," Saleh said.

"We expect sales trends to improve in [the second quarter] as we enter peak burrito selling season, and eventually aided by the Honey Chicken [limited-time offer]," he added. But he said he expected same-store sales to be higher in the second half of the year compared with the first half.

He also said that service times are likely to get faster as Chipotle brings in new equipment like produce slicers, automated avocado slicers and dual-sided grills, along with workers to facilitate the flow of orders from the grill to the checkout counter.

Any bumpy sales trends would come as price increases - at restaurants and elsewhere - are forcing consumers to rethink where, and how often, they dine out. Some analysts, ahead of Chipotle's earnings, said holiday timing, along with lengthier vacations and remote work, may have also hit the chain's sales. Topping the popularity last year of limited-time offers of smoked brisket and chicken al pastor presents other difficulties.

"Comps have been volatile so far in 2025, with weather having a larger impact on our sales than what we experienced last year," Chief Financial Officer Adam Rymer said on Chipotle's earnings call, referring to comparable or same-store sales.

"While we believe underlying transaction trends are healthy and we have a strong plan for the year, we do compare against progressively tougher comps in the first half of the year and therefore are guiding to a low- to mid-single-digit comp for the full year," he said.

Meanwhile, the company has dealt with higher avocado and dairy costs and invested in efforts to make portion sizes bigger and more consistent after complaints from customers. The company last year said it saw a "pullback in spending" at some California restaurants after the state raised its minimum wage for fast-food workers.

BofA analysts on Wednesday said a dip in Chipotle's same-store sales in January "likely plays to concerns about slowing demand," but they said underlying trends - after factoring out weather-related closures and a shift in the timing of holidays - appeared "stable." They said they expected transactions to improve later on.

Analysts at Oppenheimer, Raymond James and Truist trimmed their earnings-per-share estimates for this year. But Truist analyst Jake Bartlett said Chipotle's same-store sales outlook could be conservative, as marketing efforts ramp up through this year.

Analysts have speculated that Chipotle could add honey chicken to its menu for a limited time starting in the spring. Chipotle executives said during Tuesday's earnings call that they planned to launch a product of some kind in mid- to late March.

"Following 2024's Smoked Brisket and Chicken Al Pastor [limited-time offers] that both successfully bolstered traffic and average ticket beyond internal expectations, Chipotle Honey Chicken is launching as an LTO in the near future (we suspect mid- to late March)," William Blair analyst Sharon Zackfia said in a note on Wednesday.

"Chipotle Honey Chicken was the brand's best-ever performing limited offer in test, and guidance does not include any potential lift," she said.

Oppenheimer analysts offered a similar assessment.

"The stock's setup could become intriguing against the lower near-term bar if a potential 'honey chicken' launch in March proves impactful," they said.

-Bill Peters

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February 05, 2025 15:25 ET (20:25 GMT)

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