By Evie Liu

Chipotle Mexican Grill is expected to pose much slower revenue and earnings growth for the first quarter of 2025, as inflation and recession fears threaten to discourage consumers from eating at restaurants.

Chipotle is scheduled to report quarterly earnings on Wednesday after the market closes. Wall Street analysts polled by FactSet expect the firm to grow sales by 9% from a year ago to $2.95 billion and post 28 cents in earnings per share, one cent higher than the same period last year.

Those figures look weak compared to the 24% earnings growth and 15% sales growth across the four quarters in 2024. Analysts expect same-store sales to grow 1.3% in the first quarter of 2025, also much lower than the 7.4% for full-year 2024.

The restaurant sector overall has been under pressure as consumers dine out less amid persistent inflation. Chipotle has been performing better than peers, thanks to its loyal customer base that prefers convenient meals with fresh ingredients at a reasonable price.

Still, investors have become increasingly worried this year that policies from the Trump administration, such as tariffs, could drive the U.S. economy into a recession. That could affect even fast-growing restaurant chains like Chipotle.

The concerns are reflected in not only earnings estimates, but also share prices. Chipotle stock has tumbled 22% in 2025, and is now trading at 35 times expected earnings for the next 12 months. While that's still higher than many peers, the stock's valuation is at its lowest since 2023.

Most Wall Street analysts seem to believe the stock is oversold. Three quarters of analysts polled by FactSet have a Buy rating for the stock, with an average price target of $62. That's 33% higher than the stock's current level.

Chipotle currently operates over 3,700 restaurants and plans to open between 315 and 345 new stores this year. The majority of Chipotle's restaurants are in the U.S., but the burrito chain has been working to expand to overseas markets.

In 2023, the chain reached its first international development agreement to open restaurants in the Middle East. This week, Chipotle announced plans to open a restaurant in Mexican City by early 2026 and that it's looking to expand into other Latin American markets.

Chipotle's earnings report comes as the Trump administration threatens to impose tariffs on trade partners like Mexico, which could lead to rising prices of imported avocados from the country. The levies are currently under exemption as the two countries continue to negotiate.

Chipotle said it's been diversifying its avocado suppliers away from Mexico, and therefore won't see a big impact from the tariffs. The company has said that it would likely absorb the rising costs for now and won't raise the price of guacamole, whose main ingredient is avocado.

Write to Evie Liu at evie.liu@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 22, 2025 12:31 ET (16:31 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.