Release Date: February 04, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Chipotle Mexican Grill Inc (CMG, Financial) reported a 15% increase in sales for fiscal year 2024, reaching $11.3 billion, driven by a 7.4% comp and over 5% transaction growth.
- The company opened a record 304 new restaurants in 2024, including 257 Chipotlanes, contributing to its expansion strategy.
- Digital sales accounted for 35% of total sales, highlighting the company's strong digital presence and customer engagement.
- Chipotle Mexican Grill Inc (CMG) achieved a restaurant-level margin of 26.7% for the fiscal year, marking a 50 basis point increase year over year.
- The company demonstrated strong leadership development, with over 23,000 promotions in 2024, including three Regional Vice Presidents who started as crew members.
Negative Points
- Restaurant-level margin for the fourth quarter declined by 60 basis points year over year to 24.8%, indicating some pressure on profitability.
- The company experienced volatility in comps during the fourth quarter, particularly around the December holidays, due to calendar shifts.
- Chipotle Mexican Grill Inc (CMG) faces potential cost pressures from new tariffs on items imported from Mexico, Canada, and China, which could impact cost of sales by about 60 basis points.
- The company anticipates low- to mid-single digit comp growth for 2025, reflecting a cautious outlook amid tougher comparisons and external challenges.
- Weather and calendar shifts negatively impacted transaction comps in January 2025, with a reported negative 2% transaction comp for the month.
Q & A Highlights
Q: Can you provide more details on the pricing strategy for 2025, considering the 90 basis points of price rolling off?
A: Adam Rymer, CFO: We anticipate pricing to be around 2% for 2025. This assumes no additional price increases, as we recently implemented a 2% increase in December, which will carry through the year. We will roll off the 1% national impact from the pricing in April, resulting in approximately 2% pricing for the full year.
Q: How do you expect the comp trajectory to play out throughout the year, considering the first half challenges?
A: Adam Rymer, CFO: January saw a negative 2% transaction comp, impacted by weather and calendar shifts. We expect Q1 comps to be flat due to tough comparisons from last year's successful campaigns. The second quarter will also face strong comps, but we anticipate improvement in Q3 and Q4, aiming for low- to mid-single-digit comps for the full year.
Q: What are the key drivers for comps beyond LTOs like honey chicken?
A: Scott Boatwright, CEO: Our focus is on improving operations, marketing, and digital strategy. We aim to enhance guest experience, throughput, and leverage AI for personalized marketing. These efforts, combined with strong LTOs, should drive positive transactions and business growth.
Q: How are you addressing the labor market challenges and retention rates?
A: Scott Boatwright, CEO: Our retention rates have improved significantly due to competitive wages, benefits, and a strong culture. We are fully staffed and continue to focus on creating a positive work environment. We haven't seen any major changes in the labor market that would indicate future challenges.
Q: Can you elaborate on the international expansion strategy and Chipotlane retrofitting opportunities?
A: Scott Boatwright, CEO: We are seeing success in international markets, particularly in Europe, and are building a pipeline for growth. For Chipotlanes, we evaluate each location for potential retrofitting based on factors like lease terms and traffic flow. Where feasible, we will invest in conversions due to their proven success.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
