Chipotle (CMG, Financial) shares dropped 2% after the Q4 earnings report. The burrito chain showed modest EPS growth and a 13.1% year-over-year revenue increase to $2.85 billion, meeting expectations. However, comparable sales were slightly below forecasts, and the 2025 guidance was underwhelming. This was the first earnings call led by new CEO Scott Boatwright, following Brian Niccol's transition to Chairman and CEO of Starbucks (SBUX, Financial).

• Chipotle's Q4 comparable sales grew by 5.4%, slightly below the anticipated acceleration from Q3's 6.0%. The growth was driven by a 4.0% increase in transactions and a 1.4% rise in average check size. Despite the softer holiday trends and a 0.2% reduction due to loyalty program adjustments, the company was satisfied with the results, considering the previous year's successful Carne Asada limited-time offer.
• The 2025 guidance for low to mid-single-digit comp growth was disappointing compared to the 7.4% comps in 2024. The company noted volatility in early 2025 comps, partly due to weather impacts. Additionally, Q2 will face challenges from a rollback of price increases and the timing of Easter. Chipotle will also lap successful campaigns from early 2024, with Q2 expected to be the lowest point for comps before improvement in the latter half of 2025.
• In 2025, Chipotle aims to modernize its kitchens to enhance prep speed and simplicity, including the rollout of produce slicers across all locations by summer. These efficiencies are expected to offset last year's investments in portion sizes.
• The Chipotle Honey Chicken pilot was successful, and the company plans a broader rollout soon. In 2024, Chipotle opened a record 304 new locations, including 257 Chipotlanes, and plans to open 315-345 new locations in 2025, with at least 80% featuring a Chipotlane.
• Concerns about tariffs affecting avocado prices have been mitigated by diversifying the supply chain. Currently, only 50% of avocados are sourced from Mexico, with the rest coming from Colombia, Peru, and the Dominican Republic.

Overall, Chipotle's 2024 ended on a lackluster note with weak comps and disappointing 2025 guidance, contributing to the stock's decline. While the company is contending with successful past promotions and a price increase rollback, investors hoped for more optimistic guidance. The new CEO's conservative approach and reported volatility in December and January comps add to investor concerns.