Chipotle posted surprise same-store sales growth in the first quarter, in an initial sign it could be starting to break out of its slump.

The restaurant chain maintained its comparable sales outlook for the year, which executives previously described as conservative.

Chipotle struggled last year as high inflation hit diners’ wallets, and the war in Iran and rising gas prices have made the U.S. economy more uncertain. This also touches on aspects of earnings report.

Chipotle Mexican Grill on Wednesday reported surprising same-store sales growth, signaling the burrito chain could be starting to put last year’s woes behind it.

Here’s what the business reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Revenue: $3.09 billion vs. $3.07 billion expected

Chipotle reported first-quarter net income of $302.8 million, or 23 cents per share, down from $386.6 million, or 28 cents per share, a year earlier. Higher effective tax rates, wage inflation and rising beef prices weighed on its margins during the quarter.

Excluding legal expenses, restructuring costs and other items, the organization earned 24 cents per share.

Net sales rose 7.4% to $3.09 billion, boosted by updated store openings.

The company’s same-store sales grew 0.5%, reversing the fourth quarter’s declines. Wall Street was anticipating that its same-store sales would shrink 0.7%, based on StreetAccount estimates.

CEO Scott Boatwright commented in a statement that the results exceeded Chipotle’s expectations for the quarter. And its same-store sales momentum has continued into the second quarter, he commented on the company’s earnings conference call.

To attract diners, Chipotle has been balancing updated menu items – like its cilantro lime sauce – with bringing back favorites for a limited time, like Chicken Al Pastor. Combined with its loyalty program, the menu innovation has helped lure back younger consumers, a cohort that stopped buying Chipotle as often last year and packing lunch instead.

Traffic to Chipotle restaurants increased 0.6%. In the year-ago period, the chain saw transactions dip 2.3%, an early warning sign that diners weren’t visiting as frequently.

While many restaurant chains saw traffic and sales weaken in 2024, Chipotle initially bucked the trend. But last year was tough for the fast-casual chain and other restaurants at similar price points. Customers, concerned about the broader economy and their disposable incomes, weren’t going to its restaurants as often to save capital.

Chipotle addressed the downturn by trying to improve restaurant operations and adding novel menu items. On Monday, the enterprise proclaimed Fernando Machado, an alumnus of Restaurant Brands International, as its newest chief brand officer.

For the full year, the business reiterated its previous projection of flat same-store sales. CFO Adam Rymer stated the outlook is “conservative,” citing unpredictable consumer trends.

The economy has only become more volatile since Chipotle’s last earnings report; the U.S. war with Iran has led to climbing fuel prices, and few companies have opted to raise their full-year outlooks in recent weeks. Chipotle executives commented that sales softened in March, after the conflict began.

The war in the Middle East also means that Chipotle may open fewer restaurants this year than expected, according to Boatwright. The corporation has a development deal with Alshaya Group to operate locations in the region as part of its broader strategy to expand internationally.