Chipotle Mexican Grill on Tuesday reported quarterly earnings and revenue that topped analysts’ expectations, fueled by higher than expected same-store sales growth.
Like McDonald’s, Chipotle said traffic to its restaurants grew in the course of the first quarter despite higher menu items. Chipotle’s menu prices are up roughly 10% from a yr earlier. CEO Brian Niccol said the chain has demonstrated that it has pricing power.
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“We don’t desire to be in front of the inflationary environment, but we also don’t desire to fall behind,” he said on the corporate’s conference call.
Pedestrians wearing protective masks walk in front of a Chipotle restaurant in San Francisco, California, April 19, 2021.
David Paul Morris | Bloomberg | Getty Images
For now, Chipotle is pausing price increases, Niccol said on CNBC’s “Closing Bell.”
Shares of the corporate rose greater than 7% in prolonged trading.
Here’s what the corporate reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $10.50 vs. $8.92 expected
- Revenue: $2.37 billion vs. $2.34 billion expected
Chipotle reported first-quarter net income of $291.6 million, or $10.50 per share, up from $158.3 million, or $5.59 per share, a yr earlier. The corporate’s menu price hikes and lower avocado prices helped improve profit margins compared with the year-ago period.
Revenue climbed 17.2%, to $2.37 billion, from $2 billion in the course of the year-earlier period. Same-store sales rose 10.9%, topping StreetAccount estimates of 8.6%.
Niccol said that higher-income consumers are returning to restaurants more continuously. Even lower-income diners are visiting more often than they were within the prior six months, although their traffic stays down from a yr ago. Overall, traffic rose roughly 4% within the quarter, reversing last quarter’s decline.
In February, executives said January’s same-store sales grew by double digits. A yr earlier, the corporate saw sluggish sales because the omicron Covid outbreak put pressure on staffing and caused some temporary store closures.
Chipotle’s chicken al pastor is on course to be the chain’s hottest limited-time protein option ever, Niccol said on the corporate’s conference call. The corporate launched it in mid-March.
Digital orders accounted for nearly 40% of sales in the course of the quarter. Chipotle customers have been ordering their burritos and tacos more in person compared with the year-ago period.
Executives also outlined changes coming to restaurants to enhance speed of service and accuracy. The chain has been testing recent grills that cook faster and more consistently. It has also been experimenting with methods to staff its two make lines to maintain up with demand from each in-person diners and digital orders.
The corporate opened 41 recent locations in the course of the quarter, 34 of which included its drive-thru lanes reserved for digital order pickup.
Seeking to the remaining of the yr, Chipotle is anticipating same-store sales growth within the mid-to-high single digits. It’s expecting the identical range for its second-quarter same-store sales growth, roughly in keeping with StreetAccount estimates of 5.8%.
The corporate reiterated its plans to open between 255 to 285 recent restaurants during 2023.