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What Do Analysts Expect from Chipotle’s Revenue in 2Q16?

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Revenue sources

By the end of 1Q16, Chipotle Mexican Grill (CMG) owned and operated all of its 2,066 restaurants. In 2Q16, analysts are expecting the company to register revenue of $1.05 billion, a decline of 12.1% from $1.2 billion in 1Q15.

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Factors affecting Chipotle’s revenue

Although Chipotle’s management had undertaken several measures to counter the decline in its same-store sales growth after an outbreak of E. coli in October 2015, the company failed to win back customer loyalty. It reported negative same-store sales growth in 1Q16. Analysts are expecting this trend to continue in 2Q16. So analysts are expecting Chipotle’s revenue to fall 12.1%. In the last three months, analysts have lowered their estimates for 2Q16 by 7.5% from $1.14 billion to $1.05 billion. However, analysts are expecting Chipotle to add 54 new restaurants in 2Q16, which would offset some of the decline in its revenue.

Peer comparison

In 2Q16, analysts are expecting Panera Bread (PNRA), Shake Shack (SHAK), and Brinker International (EAT) to post revenue growth of 2.8%, 29.7%, and 15.4%, respectively.

Overview

Analysts are expecting Chipotle’s downturn to continue for some time. They expect Chipotle to post a revenue decline of 4.4% in 3Q16. However, in 4Q16 and 1Q17, analysts are expecting Chipotle to post revenue growth of 14.1% and 24.9%. Notably, 4Q15 and 1Q16 revenues were negatively affected by the E. Coli outbreak. Overall, for fiscal 2016, Chipotle is expected to post revenue of $4.2 billion, which represents a decline of 6.9% from $4.5 billion in fiscal 2015.

Note that CMG’s top ETF holder is RCD, with a 1.2% weighting.

In the next part of this series, we’ll look at analysts’ same-store sales growth estimates.

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