Chipotle is expected to maintain its leading position in the restaurant industry, even as consumers become more cautious with their spending.

The burrito chain, based in California, will report its earnings on Wednesday after the market closes. Analysts predict a strong performance, with revenue expected to reach $2.94 billion, a 17% increase from last year, and adjusted earnings per share anticipated to be $0.32, a 25% rise.

Foot traffic at Chipotle is projected to grow by 6.3%, although the average check size is only expected to increase by 2.63%. One analyst believes that sales growth this quarter will be the highest of the year. They noted that traffic and same-store sales should remain strong in the second half of the year, supported by innovation, marketing efforts, and improved service speed.

Another analyst described Chipotle as one of the best-positioned restaurants to maintain sales momentum despite a tough economic environment, thanks to strong customer loyalty and good value for money.

However, there are concerns that value meals from competitors like McDonald’s could pose a threat. An analyst warned that aggressive pricing strategies from quick-service restaurants could create short-term challenges for Chipotle, Wingstop, and Shake Shack.

Despite potential challenges, another analyst with an Outperform rating on Chipotle’s stock believes the company has various strategies to sustain long-term growth. These include adding late-night or breakfast hours, enhancing the loyalty program, and appealing to Gen Z customers as they become key household decision-makers.

Some analysts are keeping an eye on portion sizes at Chipotle. One analyst conducted a detailed study of portion sizes at several Chipotle locations in New York City and found no significant issues.

Others believe Chipotle will continue to perform well, regardless of these concerns. One analyst mentioned that customers are unlikely to stop going to Chipotle due to slightly smaller portions and will likely ask for more if needed. They also suggested that any negative social media buzz about portion sizes will be short-lived.

In the second quarter, Chipotle executed its first 50-for-1 stock split, but shares have since dropped nearly 18% to around $53.

Here’s what Wall Street expects from Chipotle in Q2 2024, compared to Q2 2023:

• Revenue: $2.94 billion compared to $2.5 billion
• Adjusted earnings per share: $0.32 compared to $0.25 (or $12.32 before the stock split)
• Same-store sales growth: 9.23% compared to 7.4%

For the full year, Chipotle expects sales growth in the mid- to high-single digits, an increase from its previous guidance of mid-single-digit growth.

Wall Street expects Chipotle to end Q2 with a total of 3,540 locations. In Q1, the company opened 47 new restaurants, 43 of which feature its drive-through concept, Chipotlane. This year, Chipotle plans to open 285 to 315 new locations, with over 80% including the drive-through. Long term, the company aims to operate 7,000 restaurants in North America.

After Q1, CEO Brian Niccol expressed confidence in achieving the company’s long-term goal of more than doubling its business in North America and expanding internationally.