Chipotle Shares Slide 10% on Weak Comps and Soft Outlook

Chipotle Mexican Grill (NYSE:CMG) shares dropped 10% in premarket trading Wednesday after the company delivered a mixed second-quarter report and issued a conservative full-year sales forecast.

Adjusted earnings per share came in at $0.33, slightly beating analyst estimates. However, revenue rose 3.0% year-over-year to $3.1 billion, just under Wall Street’s $3.11 billion forecast.

Comparable restaurant sales fell 4.0%, driven by a 4.9% decline in customer visits, which was only partly offset by a 0.9% increase in average transaction size. Despite some positive traction in June, overall performance disappointed investors.

"We are seeing momentum build as we rolled out our summer marketing initiatives and as our comparisons ease," said CEO Scott Boatwright.

Profitability metrics weakened, with operating margin slipping to 18.2% from 19.7% a year earlier, while restaurant-level margins declined to 27.4% from 28.9%. Rising ingredient costs—especially for steak and chicken—and softer traffic weighed on margins despite earlier price hikes.