Chipotle's (NYSE:CMG) Q2 Sales Beat Estimates

Mexican fast-food chain Chipotle (NYSE:CMG) beat analysts' expectations in Q2 CY2024, with revenue up 18.2% year on year to $2.97 billion. It made a non-GAAP profit of $0.34 per share, improving from its profit of $0.25 per share in the same quarter last year.

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"The second quarter was outstanding as successful brand marketing, including the return of Chicken Al Pastor, drove strong demand to our restaurants. Our focus and training around throughput paid off as we were able to meet the stronger demand trends with terrific service and speed driving over 8% transaction growth in the quarter," said Brian Niccol, Chairman and CEO, Chipotle.

Born from a desire to offer quick meals with fresh, flavorful ingredients, Chipotle (NYSE:CMG) is a fast-food chain known for its healthy, Mexican-inspired cuisine and customizable dishes.

Modern Fast Food

Modern fast food is a relatively newer category representing a middle ground between traditional fast food and sit-down restaurants. These establishments feature an expanded menu selection priced above traditional fast food options, often incorporating fresher and cleaner ingredients to serve customers prioritizing quality. These eateries are capitalizing on the perception that your drive-through burger and fries joint is detrimental to your health because of inferior ingredients.

Sales Growth

Chipotle is one of the most widely recognized restaurant chains in the world and benefits from brand equity, giving it customer loyalty and more influence over purchasing decisions.

As you can see below, the company's annualized revenue growth rate of 15.5% over the last five years was impressive as it added more dining locations and increased sales at existing, established restaurants.

This quarter, Chipotle reported robust year-on-year revenue growth of 18.2%, and its $2.97 billion in revenue exceeded Wall Street's estimates by 1.1%. Looking ahead, Wall Street expects sales to grow 13.7% over the next 12 months, a deceleration from this quarter.

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Same-Store Sales

Same-store sales growth is a key performance indicator used to measure organic growth and demand for restaurants.

Chipotle's demand within its existing restaurants has generally risen over the last two years but lagged behind the broader sector. On average, the company's same-store sales have grown by 7.9% year on year. With positive same-store sales growth amid an increasing number of restaurants, Chipotle is reaching more diners and growing sales.

In the latest quarter, Chipotle's same-store sales rose 11.1% year on year. This growth was an acceleration from the 7.4% year-on-year increase it posted 12 months ago, which is always an encouraging sign.

Key Takeaways from Chipotle's Q2 Results

We were impressed by Chipotle's same-store sales beat vs. expectations this quarter, which drove revenue outperformance. Operating profit was also ahead, showing that the growth was better and it was more efficient growth than expected as well. Zooming out, we think this was a great quarter that shareholders will appreciate. The stock traded up 2.1% to $52.89 immediately after reporting.

Chipotle may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.