Chipotle (CMG) is expected to post another strong quarter as investors await the naming of a permanent CEO.
On Tuesday after market close, Chipotle is expected to report revenue of $2.82 billion, a 13.8% year-over-year jump, according to Bloomberg consensus data. Adjusted earnings per share are estimated at $0.25, a 9.2% jump, while same-store sales are expected to be up 6.38% from a year ago.
The growth is driven by higher menu prices, faster service, and the return of the popular smoked brisket, among other factors.
Speed of service initiatives on Chipotle’s make line is yielding results, per Wedbush analyst Nick Setyan in a note to clients. In Q2, former CEO Brian Niccol said the company was using improved tools and training to increase throughput and optimize “cadence of digital orders during peak periods.”
Adding expo — a crew member between salsa and cash register who helps expedite the bagging and payment process — helped add five more orders in a restaurant’s peak 15 minutes. Right now, a little over half of locations have been able to staff the position. Setyan believes that those five more orders could lead to a roughly 1% sales growth.
He also said near- and medium-term transaction growth drivers include maturing new units, customers joining the loyalty program, and increased marketing.
Chipotle ended Q2 with 3,530 stores, slightly under the 3,540 locations anticipated. This year, it expects to open 285 to 315 new locations, with more than 80% of them having drive-throughs. Long term, it plans to operate 7,000 restaurants in North America. As it ramps up expansion, it’s been investing in promoting from within.
Wall Street is also keeping an eye out for ongoing ingredient inflation that could potentially justify another price increase in Q4, including around chicken and avocados, TD Cowen Andrew Charles wrote in a note to clients.
In June, the company conducted its first 50-for-1 stock split. Shares are up more than 60% from a year ago, compared to a nearly 42% gain from the S&P 500 (^GSPC). In the last three months, shares are up around 16%, compared to a 7% gain for the S&P 500. During that time, Niccol was tapped to lead the turnaround at Starbucks (SBUX).
Scott Boatwright was then named interim CEO, and is expected by many Wall Street pros to be named CEO permanently. He joined Chipotle as COO in 2017, after a 10-year stint at Arby’s.
If Boatwright secures the top job, he’ll likely keep Chipotle on the same path.
“We are a high-growth organization, both from same-restaurant sales as well as new-restaurant development, and we need purpose-driven, passionate people for us to hit our long-term goals,” he told Yahoo Finance shortly before being named interim CEO.
Here’s what Wall Street expects Chipotle to post for its Q3 results, per Bloomberg consensus data, compared to Q3 last year:
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Revenue: $2.82 billion, compared to $2.47 billion
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Adjusted earnings per share: $0.25, compared to $0.23
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Same-store sales growth: 6.38%, compared to 5.00%
For 2024, the company expects sales growth of mid- to high-single digits for the full year, which was up from the previous guidance of mid-single-digit growth set in Q4 of last fiscal year.
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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