Chipotle Faces Lettuce Scare & Airlines Defy Fuel Costs

**SPEAKER_1** (0:00)
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**Ann Berry** (0:26)
Microsoft, on its way to the biggest daily market cap gain in history, why examine why the stock is up and why rival Metas is down.
Airlines, reporting record revenue, but spending billions more on fuel. We put tickers on a sticker and race through the sky-high earnings results. And Chipotle, its turnaround recently faced an unexpected stress test, but it appears the burrito chain passed with flying colors. We break down why. For Thursday, July 30th, it's Brew Markets Daily, and I'm Ann Berry.
More market details to come. But first, Chipotle, shaking off the cyclospora scaries to deliver a much stronger than expected quarter. The fast casual dining company Ticker CMG, today reported adjusted earnings of 33 cents a share, just ahead of Wall Street estimates. Well, eking out that beat was a win, as Chipotle absorbed higher food and packaging costs instead of passing them fully on to customers. And another victory lap came as the company blew past revenue expectations. That top line climbed over 9 percent to hit more than 3.3 billion dollars with that all-important sector metric that same store sales rising 2.2 percent, comfortably beating forecasts of just over 1 percent, thanks to both higher traffic and modest menu price increases. Then there was new unit growth. That was healthy, too. For the quarter, 100 company-owned restaurants came to life. But the biggest headline was the outlook, and we know the market loves the forecast. Management raised its full year same-store sales growth forecast from essentially flat to low single digits, not least thanks to menu innovation. With new offerings, we've talked about some of them here on the show, including Honey Chicken and the return of Chicken Al Pastor to help drive customer traffic. Well, all this good news was especially notable because investors have been worried about how the recent cyclospora outbreak linked to iceberg lettuce at competitor Taco Bell would hit Chipotle's turnaround momentum this year. And just to explain the link, Chipotle has emphasized that its own lettuce supply is not linked to the outbreak. It doesn't use shredded iceberg lettuce and sources its remains from California, which is not the location linked to the problem. But the negative headlines have weighed on fearful customers sector-wide. I can only speak for myself, I know I have stopped eating lettuce no matter where I am and no matter what type, rational or not, though that may be. And Chipotle's July sales did dip about 2%, with management cautioning that the third quarter will likely be the most challenged in terms of a lingering impact from the lettuce headlines.
Well, Chipotle market cap just under $50 billion has been looking to get the share price going again. It's still down over 11% for the past year. And that's even after a more than 13% pop today. So there are green shoots. The big question for the specific quarter coming up, will its operational efforts continue to outweigh a healthcare scare it can't control? A big second half of the year coming up for the business now. We're going to keep on watching. Well, on now to other headlines from the day's trading session, starting with Meta. Shares falling nearly 8% after investors digested its massive spending bill.
Now, the company said that free cash flow plunged 91% from a year ago as capital expenditures on AI continue to surge.

**Jean Coteau** (3:57)
And going forward, Meta raised its spending outlook, expecting to spend as much as $145 billion this year. And once again, CEO Mark Zuckerberg teased the idea that the company might lease out excess system capacity to third parties, saying, We're getting a lot of offers for compute at a significant premium over what we paid for it.
Well, today, investors appear concerned about Meta's pace of spending. It might be looking for more concrete details around possible revenue from excess compute.

**Ann Berry** (4:23)
Over to a company with a thriving cloud computing business, and that is Microsoft. Shares of the company ticker MSFT, jumping more than 16% after delivering a beat on both revenue and earnings.

**Jean Coteau** (4:35)
Azure cloud revenue surged 43%, its fastest growth in four years, suggesting Microsoft's AI investments are translating into stronger customer demand. Capital expenditures also climbed sharply, rising 70%.
But unlike Meta, investors appeared comfortable with the bill.