Investing.com -- Shares in Chipotle Mexican Grill (NYSE:CMG) fell by nearly 6% in premarket US trading after the burrito chain reported revenue and comparable sales that missed Wall Street estimates.
Revenue of $2.79 billion was below analysts' projections of $2.82 billion, while a 6% increase in comparable restaurant sales was under expectations of 6.3%. Despite signs of moderating inflationary pressures in the US, customers are still carefully considering spending on more expensive services like dining out.
Chipotle has been able to mostly weather these pressures, however, thanks in part to resilient demand for its items like rice bowls and tacos. The company posted adjusted earnings per share of $0.27, above analyst forecasts of $0.25.
For 2024, the company reiterated its outlook for comparable restaurant sales growth in the mid- to high-single digits.
Chipotle added that it expects to open 315 to 345 restaurants in 2025, implying growth of around 8.6% at the midpoint. Executives had previously said in July that the figure would "towards the high-end of the 8% to 10% range" next year "assuming time line conditions do not worsen," analysts noted.
In a note to clients, analysts at Truist argued that, since these timelines "have not worsened," they view the outlook as "conservative" and potentially related to a less aggressive stance from Chipotle's new management team.
The group's former Chief Executive Brian Niccol left the role in a surprise move in August to take the helm of coffee giant Starbucks (NASDAQ:SBUX). Scott Boatwright, formerly Chipotle's Chief Operating Officer, was tapped to replace Niccol on an interim basis.
Speaking to analysts following the earnings release, Boatwright flagged the business is continuing to grapple with "modest inflation" in costs of sales and labor expenses. Prices for commodities such as dairy and beef have been on the rise, contributing to an 80-basis point drop in restaurant-level margins year-on-year.
Analysts at Barclays (LON:BARC) said Chipotle appears to have chosen to adopt "more limited" near-term menu pricing increases to offset these pressures, adding the move is "prudent in the current environment."
"[M]enu pricing will enter 2025 at just above [roughly] 1%, which appears conservative with strong positive traffic and believed pricing power," the analysts led by Jeffrey Bernstein wrote in a note to clients.
(Yasin Ebrahim contributed reporting.)