Chipotle’s third quarter results were met with a significant negative market reaction, reflecting investor concerns over persistent consumer headwinds and flat same-store sales trends. Management attributed these challenges to a broad-based pullback in frequency among low- and middle-income guests, particularly those aged 25 to 35, who have been affected by inflation, unemployment, and increased student loan repayments. CEO Scott Boatwright described the operating environment as “challenging,” noting that the company’s heightened marketing efforts and menu innovation only partially offset declining traffic.
Is now the time to buy CMG? Find out in our full research report (it’s free for active Edge members).
Chipotle (CMG) Q3 CY2025 Highlights:
- Revenue: $3.00 billion vs analyst estimates of $3.02 billion (7.5% year-on-year growth, in line)
- Adjusted EPS: $0.29 vs analyst estimates of $0.29 (in line)
- Adjusted EBITDA: $575.8 million vs analyst estimates of $590.1 million (19.2% margin, 2.4% miss)
- Operating Margin: 15.9%, down from 16.9% in the same quarter last year
- Locations: 3,916 at quarter end, up from 3,615 in the same quarter last year
- Same-Store Sales were flat year on year (6% in the same quarter last year)
- Market Capitalization: $41.97 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Chipotle’s Q3 Earnings Call
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Zachary Ogden (TD Cowen) asked if management’s “learn and go” pricing strategy signals a shift toward prioritizing traffic over margin expansion. CFO Adam Rymer replied that the approach is designed to preserve guest value during inflation, but the long-term goal remains responsible margin expansion.
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Lauren Silberman (Deutsche Bank) inquired about the sources of traffic losses and whether loyal customers are reducing frequency. CEO Scott Boatwright explained that the pullback is concentrated among low- and middle-income cohorts, with data showing they are eating out less often rather than switching to competitors.
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Sharon Zackfia (William Blair) questioned the throughput gains from high-efficiency equipment. Boatwright said early results from test locations show improved labor efficiency and guest satisfaction, though he declined to provide specific data.
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Danilo Gargiulo (Bernstein) asked how operational changes, beyond marketing, will address traffic declines. Boatwright highlighted system-wide retraining, new incentive alignment, and a renewed focus on digital engagement and loyalty as key actions.
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David Palmer (Evercore ISI) pressed on the expected timeline for margin recovery given the decision not to fully offset inflation with price. Rymer and Boatwright reiterated that near-term margins will be pressured, but historical performance shows Chipotle can regain profitability as traffic recovers.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) signs of traffic recovery among core low- and middle-income customer segments, (2) the effectiveness of new menu introductions and marketing campaigns in driving repeat visits, and (3) the pace and operational impact of the high-efficiency equipment rollout. The success of digital loyalty initiatives and international expansion will also be important indicators of Chipotle’s ability to return to sustainable growth.
Chipotle currently trades at $31.72, down from $39.79 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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