Key Points
After a roughly year-long decline, Chipotle's same-store sales rose in the first quarter.
Yet higher costs took a toll on the company's bottom line.
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Shares of Chipotle Mexican Grill (NYSE: CMG) gained on Thursday after the burrito baron said sales at its restaurants were back on the uptrend.
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A return to growth
Chipotle's revenue rose 7.4% year over year to $3.1 billion in the first quarter.
The restaurant chain opened 49 company-owned stores, bringing its total count to 4,090 locations as of March 31. Forty-two of these new stores featured a Chipotlane -- drive-throughs designed to provide customers with a convenient way to pick up digital orders -- which management credited with boosting sales and restaurant profitability.
Chipotle also saw sales at its existing locations return to growth. Comparable restaurant sales, which measure revenue from stores open for at least 13 months, inched up by 0.5%. The gains were driven by a 0.6% increase in traffic, which was slightly offset by a 0.1% decrease in average check size.
This comp growth was a welcome relief for investors, as it helped assuage fears that surging energy prices would force people to eat at restaurants less often.
Still, rising expenses weighed on Chipotle's profit margins. Higher beef, freight, and labor costs drove its adjusted restaurant-level operating margin down to 23.7% from 26.2% in the prior-year quarter.
All told, Chipotle's adjusted net income fell 20% to $316 million, or $0.24 per share.
Room for further expansion
Chipotle expects to open a total of 350 to 370 restaurants in 2026, including 10 to 15 franchised stores in international markets.
The company also maintained its projection of flat full-year comparable restaurant sales, a forecast that could prove conservative if peace talks between the U.S. and Iran are successful and energy prices fall.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends the following options: short June 2026 $36 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
