Chipotle shares soared after the company’s earnings and revenue beat Wall Street estimates.
Chipotle Mexican Grill reported quarterly earnings and revenue on Tuesday, buoyed by same-store sales growth that beat analysts’ expectations.
Chipotle consolidates in the US and increases the flow of customers by setting its prices. Photo: PR Newswire
Like McDonald’s, Chipotle said traffic at its restaurants increased in the first quarter despite higher menu items. Chipotle’s menu prices are up about 10% from last year. CEO Brian Nicol said the chain has shown it has pricing power.
“We don’t want to be ahead of an inflationary environment, but we don’t want to be behind either,” he said on the company’s conference call.
For now, Chipotle is holding off on the price hike, Nichol said on “Closing Bell.”
Shares of the company rose more than 7% in extended trading.
Here’s what the company reported compared with what Wall Street expected, based on a poll of analysts conducted by Refinitiv:
- Earnings Per Share: $10.50 Vs. $8.92 expected.
- Revenue: $2.37 billion versus the $2.34 billion expected.
Chipotle reported first-quarter net income of $291.6 million, or $10.50 per share, compared with $158.3 million, or $5.59 per share, a year earlier. The company’s menu price increase and lower avocado prices helped improve profit margin compared to the same period last year.
Chipotle consolidates in the US and increases the flow of customers by setting its prices. Photo: Hitechglitz
Revenue rose 17.2% to $2.37 billion, up from $2.0 billion during the same period a year earlier. Same-store sales increased 10.9%, beating StreetAccount’s estimate of 8.6%.
Nichol said consumers with higher incomes are returning to restaurants more often. Even lower-income diners are coming in more frequently than in the past six months, although their traffic is down from a year ago. Overall, traffic increased nearly 4% in the quarter, reversing last quarter’s decline.
In February, executives said same-store sales increased by double digits in January. A year ago, the company posted sluggish sales as the Omicron Covid outbreak put pressure on staff and temporarily closed some stores.
Nichol said on the company’s conference call that Chipotle’s Chicken Al Pastor is on track to become the chain’s most popular limited-time protein option. The company released it in mid-March.
Digital orders contributed to approximately 40% of sales during the quarter. Chipotle customers ordered more of their burritos and tacos in person than in the prior year period.
Chipotle consolidates in the US and increases the flow of customers by setting its prices. Photo: Wikiwand
The executives also outlined changes coming to the restaurant to improve speed and accuracy of service. The chain is testing new grills that cook faster and more consistently. It’s also experimenting with how to staff its two lines to meet demand for both in-person diners and digital orders.
The company opened 41 new locations during the quarter, 34 of which included its drive-thru lanes reserved for digital order pickup.
Looking ahead to the rest of the year, Chipotle anticipates same-store sales growth in the mid to high single digits. He expects the same range for Q2 same-store sales growth, roughly in line with StreetAccount estimates of 5.8%.
The company reiterated its plan to open 255 to 285 new restaurants during 2023.
