Chipotle Earnings Preview Growth Slowdown Looms

Key Highlights

Slower Burn for the Burrito Giant

Chipotle Mexican Grill $CMG, the fast-casual restaurant powerhouse known for its customizable burritos and bowls, is heading into its Q1 2025 earnings report facing an unfamiliar challenge: a significant slowdown in growth.

After a blockbuster 2024 that saw 24% growth in earnings and 15% revenue gains, Wall Street is bracing for a stark deceleration. This time around, analysts expect only 9% top-line growth, forecasting revenue of $2.95 billion - a number that, while still solid, is a sharp contrast to last year’s sprint.

More worryingly, earnings per share (EPS) are projected to increase by just a penny, reaching 28 cents, and same-store sales - a key retail metric are expected to grow a mere 1.3%, down drastically from 2024’s robust 7.4%.

These numbers have understandably shaken investor confidence, contributing to a 22% drop in Chipotle’s share price so far in 2025. But is this the start of a longer-term decline or simply a breather for a stock that’s outpaced most of its peers?

Consumer Pressure and Market Headwinds

The broader economic backdrop paints a cautious picture. High inflation and rising interest rates have curbed consumer spending, particularly on discretionary categories like dining out. Across the restaurant industry, brands are reporting weaker traffic, and even giants like Chipotle aren’t immune.

Chipotle, however, has held up better than many competitors, buoyed by a loyal customer base that values fresh ingredients, convenience, and fair pricing. Yet as signs of a consumer pullback deepen, investors are right to ask how long that resilience can last.

Further complicating the outlook is the Trump administration’s renewed tariff threats—specifically on imports from Mexico, which could drive up prices for key ingredients like avocados, the heart of Chipotle’s beloved guacamole.

But the company seems prepared. Executives recently announced that Chipotle has diversified its avocado suppliers beyond Mexico. While some cost pressures may be absorbed in the short term, Chipotle maintains that menu prices will remain stable—at least for now.

Discount or Danger Sign?

Despite the selloff, Chipotle’s stock still trades at 35x forward earnings—a premium multiple, but also the lowest valuation for the company since 2023. That suggests the market is recalibrating its expectations but hasn’t lost faith in the brand’s long-term potential.

And the Street is still broadly bullish. According to consensus estimates, nearly 75% of analysts rate the stock a “Buy”, with an average price target of $62 per share—33% above current levels.

Much of that optimism hinges on Chipotle’s expansion strategy, which remains aggressive even amid macroeconomic uncertainty. The company currently operates more than 3,700 restaurants, with plans to open 315 to 345 new locations in 2025. Most of these will be in the U.S., but Chipotle is now eyeing international growth, too.

In 2023, it signed its first Middle East development agreement, and just last week, it revealed plans to open a restaurant in Mexico City by early 2026, a move that would bring the brand full circle to the region that inspired its culinary DNA.

Much Ado About Guacamole?

The elephant in the earnings room is the looming U.S.-Mexico trade tension. The Trump administration has floated the possibility of reinstating tariffs on Mexican agricultural imports, including avocados. While currently on pause, this threat adds an unwelcome layer of uncertainty to Chipotle’s cost structure.

However, management has tried to get ahead of the curve. By broadening its supplier base and committing not to pass costs onto consumers (yet), Chipotle is trying to safeguard its margins and maintain its value proposition.

Still, any perception of rising input costs—even if well-managed—could pressure the stock further in the short term, particularly if Q1 results show weaker margins or less pricing power than expected.

Final Take

The upcoming Q1 earnings are set to be a litmus test for Chipotle’s durability in a more hostile macro environment. While the expected slowdown in growth is real, it must be viewed in context: Chipotle is coming off a banner year and facing an industry-wide slowdown, not a company-specific one.

The strategic levers remain intact: A scalable restaurant model, operational efficiency, brand loyalty, and calculated global expansion. In that sense, Chipotle is not just surviving but quietly positioning itself for its next growth wave.

For traders, the volatility surrounding earnings may present both risk and opportunity. A disappointing quarter could push shares even lower, offering an attractive entry point for long-term investors. Conversely, any upside surprise—especially on margins or store traffic—could spark a relief rally, particularly given the oversold technical setup.

Bottom line? Chipotle’s Q1 results may tell us less about the company’s trajectory and more about investor patience. For now, caution is warranted, but the burrito bull case isn’t off the menu just yet.

Disclosure: The author does not hold a position in Chipotle Mexican Grill at the time of publication. This article is intended for informational purposes only and does not constitute investment advice.

CMG Stock Analysis

Total Score

 

 

score

3.03

 

Strong Sell

Hold

Strong Buy

 

 

Risk Level

 

LOW

HIGH

 

CMG has Low Risk Level. Click here to check what is your level of risk