Mexican fast-food chain Chipotle (NYSE:CMG) reported Q1 CY2024 results topping analysts' expectations, with revenue down 14.1% year on year to $2.70 billion. It made a non-GAAP profit of $13.37 per share, improving from its profit of $10.50 per share in the same quarter last year.

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"We had another outstanding quarter driven by our improvement in throughput and successful marketing initiatives, including Braised Beef Barbacoa and Chicken Al Pastor, which drove strong sales and transactions. The results we are seeing from our focus on developing exceptional people, preparing delicious food and fast throughput gives me confidence that we can achieve our long-term target of more than doubling our business in North America and expanding internationally," 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 15.2% 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 14.1%, and its $2.70 billion in revenue exceeded Wall Street's estimates by 1.2%. Looking ahead, Wall Street expects sales to grow 13.6% 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 7.8% 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 7% year on year. This growth was a deceleration from the 10.9% year-on-year increase it posted 12 months ago, showing the business is still performing well but lost a bit of steam.

Key Takeaways from Chipotle's Q1 Results

We liked that Chipotle beat same store sales, revenue, gross margin, and EPS expectations. Full year guidance for comparable store sales was raised from mid-single digit year on year percentage increase to mid to high-single digit percentage increase. Zooming out, we think this was a great quarter that shareholders will appreciate. The stock is up 4.1% after reporting and currently trades at $3,045 per share.

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.