Chipotle Q3 Earnings Beat, Revenues Lag Estimates, Stock Down

Chipotle Mexican Grill, Inc. CMG reported third-quarter 2025 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. Both top and bottom lines increased year over year.

Chipotle stock sank 16.2% after hours as investors reacted to soft traffic trends and a cautious outlook. Management flagged a notable shift from lower to middle-income diners, who account for approximately 40% of sales, citing inflation, weak wage growth and student loan repayments. Guidance for low to mid-single-digit comp declines in fourth-quarter 2025 and margin pressure in 2026, caused by rising beef costs and tariffs that will not be fully offset by pricing, fueled concerns about slowing growth despite menu innovation and expansion plans.

CMG’s Q3 Earnings & Revenue Discussion

For the quarter under review, CMG reported adjusted earnings per share (EPS) of 29 cents, beating the Zacks Consensus Estimate of 28 cents. The bottom line rose 7.4% from 27 cents reported in the year-ago quarter.

Quarterly revenues of $3 billion missed the consensus mark of $3.02 billion by 0.5%. However, the top line rose 7.5% on a year-over-year basis. This upside was driven by new restaurant openings and an increase in comparable restaurant sales.

Comparable restaurant sales in the third quarter rose 0.3% compared with a 6% growth reported in the prior-year quarter. During the quarter, comps were aided by a 1.1% increase in average check, marginally overshadowed by lower transactions of 0.8%.

During the third quarter, digital sales contributed 36.7% to total food and beverage revenues.

Chipotle’s Restaurant Openings

Strength in new restaurant openings aided the company’s performance in the third quarter. In the reported quarter, Chipotle opened 84 company-owned restaurants, with 64 featuring a Chipotlane.

CMG’s Costs, Operating Highlights & Net Income

In the third quarter of 2025, food, beverage and packaging costs, as a percentage of revenues, came in at 30% compared with 30.6% reported in the prior-year quarter. This was due to menu price increases implemented in 2024 and enhanced cost-of-sales efficiencies. However, it was partially offset by inflation, particularly in beef and chicken, as well as the impact of newly imposed tariffs. We expected the metric to be 29.9%.

In the quarter under discussion, the restaurant-level operating margin reached 24.5%, down from 25.5% reported in the prior-year period. We predicted the metric to be 25.3%.

Adjusted net income in the reported quarter amounted to $389.9 million compared with $366.6 million reported in the prior-year quarter. Our estimate for the metric was $403 million.

Balance Sheet of Chipotle

As of Sept. 30, 2025, the company reported cash and cash equivalents of $698.7 million compared with $748.5 million as of Dec. 31, 2024.

Inventory totaled $46.4 million as of Sept. 30, 2025, compared with $48.9 million as of Dec. 31, 2024.

CMG’s 2025 Outlook

For 2025, management anticipates comparable sales to decline in the low-single digit range compared with the prior estimate of roughly flat.

CMG expects to open between 315 and 345 new company-operated restaurants in 2025, with more than 80% featuring a Chipotlane. It expects a tax rate in the range of 25-27% in 2025.

CMG’s Zacks Rank & Key Picks

Chipotle currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Zacks Retail-Wholesale sector are Red Robin Gourmet Burgers, Inc. RRGB, Dutch Bros Inc. BROS and First Watch Restaurant Group, Inc. FWRG.

Red Robin currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Red Robin has gained 22.2% in the year-to-date period. The Zacks Consensus Estimate for Red Robin's fiscal 2025 sales indicates a decline of 2.8% year over year, while EPS implies a rise of 82% from the year-ago period’s levels.
 
Dutch Bros presently carries a Zacks Rank #2 (Buy). The stock has gained 10.4% in the year-to-date period.
 
The Zacks Consensus Estimate for BROS’ 2026 sales and EPS implies growth of 23.8% and 29.7%, respectively, from the year-ago levels.
 
First Watch Restaurant presently carries a Zacks Rank #2. The stock has declined 8.3% in the year-to-date period.
 
The Zacks Consensus Estimate for First Watch Restaurant’s 2026 sales and EPS indicate an increase of 14.8% and 108.3%, respectively, from the year-ago levels.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research