Chipotle Q2 earnings blow past expectations, boosted by brand loyalty and value proposition

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Chipotle (CMG) is devouring expectations, even as the restaurant industry struggles with cautious consumers. On Wednesday after market close, the burrito chain reported earnings that beat Wall Street's estimates across the board, including on revenue, earnings, and same-store sales. Revenue jumped 18.2% year over year to $2.97 billion, versus expectations of $2.94 billion. Adjusted earnings per share came in at $0.34, compared to an estimate of $0.32. Same-store sales jumped 11.1% year over year, versus the 9.23% Wall Street anticipated. In Q1, same-store sales were up 7%. CEO Brian Niccol called the quarter "outstanding," thanks to "successful brand marketing" alongside the return of the popular Chicken al Pastor. Foot traffic jumped 8% in the quarter, more than the 6.3% expected. Prior to the report, UBS analyst Dennis Geiger called the company "one of the best positioned concepts to sustain sales momentum in a tough macro given customer brand affinity and a solid value for the money proposition." But choosier customers and value meals from fast food players like McDonald's (MCD) could pose a threat, wrote Wedbush analyst Nick Setyan in a client note. "On the other hand, we'd rather err on the side of caution and view quick-service restaurant's aggressiveness as a near-term (even if on the margin) headwind at Chipotle, Wingstop, and Shake Shack," he wrote in a note to clients. Workers fill food orders at a Chipotle restaurant on April 1, 2024, in San Rafael, Calif. (Justin Sullivan/Getty Images) (Justin Sullivan via Getty Images) Bernstein analyst Danilo Gargiulo, who has an Outperform rating and price target of $80 on the stock, wrote that there are more levers the fast-casual restaurant could pull to keep the flame burning long term. They include adding late night or breakfast hours, revamping its loyalty program, and leaning into its Gen Z fans, as the demographic increasingly becomes household decision-makers. In June, the company conducted its first 50-for-1 stock split. Shares have since fallen nearly 18% in the last month. Shares jumped roughly 14% in after-hours trading following the earnings results. Here's what Chipotle posted in Q2 2024, compared to Bloomberg consensus data: Revenue: $2.97 billion versus $2.94 billion Adjusted earnings per share: $0.34 versus $0.32 Same-store sales growth: 11.1% versus 9.23% 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. Chipotle ended Q2 with 3,530 stores, slightly less than the 3,540 locations anticipated. In Q2, Chipotle opened 52 new restaurants, with 46 locations featuring its drive-through Chipotlane. This year, it expects to open 285 to 315 new locations, with more than 80% of them having the drive-through concept. Long term, it plans to operate 7,000 restaurants in North America. Story continues — Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com. Click here for the latest stock market news and in-depth analysis, including events that move stocks Read the latest financial and business news from Yahoo Finance