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Will Chipotle Report Low Same-Store Sales Growth in 3Q15?

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Same-store sales growth

Same-store sales growth is a key metric that investors and analysts closely follow when it comes to the restaurant business. Chipotle (CMG) experienced tremendous same-store sales growth in 2014, with most of its quarters reporting a double-digit growth. For the full year 2014 Chipotle reported a same-store sales growth of 16.4%.

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2015 recap

  • Following its high-performance 2014 results, Chipotle delivered a double-digit same-store sales growth in its first quarter of 2015, at 10.4%.
  • However, this high growth did not seem sustainable, and the company’s 2Q15 same-store sales growth dropped to 4.3%.
  • In the first two quarters, the same-store sales growth drop came from lower traffic growth, as shown in the chart above.
  • In 2Q15, the company experienced traffic growth of -0.3%.

3Q15 expectations

  • In the upcoming 3Q15 quarter, Wall Street analysts are expecting 2.3% same-store sales growth.
  • The company’s same-store sales growth has also trended with the food and drinking place retail sales growth, as you can see in the chart above.
  • On a rolling three-month basis, food and drinking place retail sales growth also trended downward in the past two months. As of August 2015, it stood at 8.3%, down from 8.7% in 2Q15 and 9% in 1Q15.
  • This further points toward expectations of a lower same-store sales growth for Chipotle in 3Q15.
  • This does not necessarily mean negative results because the whole of 2015 is up for comparison against the double-digit growth in 2014. This makes 2014 a high benchmark for comparison.

Currently, the iShares Dow Jones US Consumer Service ETF (IYC) holds about 0.8% of Chipotle and 3% of Starbucks (SBUX) as a percentage of its total portfolio.

To see how other restaurants such as Shake Shack (SHAK), Panera Bread (PNRA), and Habit (HABT) have performed in 2Q15, you may read Comparative Analysis of 8 US Fast Casual Restaurants.

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