Chipotle posts big earnings beat as diners shake off higher prices

Chipotle
Mexican
Grill
on
Wednesday
reported
quarterly earnings and
revenue
that
beat
analysts’
expectations,
fueled
by
higher
traffic
to
its
restaurants.

The
stock
rose
4%
in
extended
trading.

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

• 
  Earnings per
  share:
  $13.37
  adjusted
  vs.
  $11.68
  expected
• 
  Revenue:
  $2.7
  billion
  vs.
  $2.68
  billion
  expected

Chipotle
reported
first-quarter
net
income
of
$359.3
million,
or
$13.01
per
share,
up
from
$291.6
million,
or
$10.50
per
share,
a
year
earlier.

Excluding
a
36-cent
hit
from
increases
to
its
legal
reserves,
the
burrito
chain
earned
$13.37
per
share.

Net
sales climbed 14.1%
to
$2.7
billion.

The
company’s
same-store
sales
rose
7%,
topping
StreetAccount
estimates
of
5.2%.
Chipotle
said
traffic
increased
5.4%
from
the
year-ago
period,
while
the
average
check
was
up
just
1.6%.

In

February,
Chief
Financial
Officer
Jack
Hartung
told
analysts
that “unusually
cold
weather”
hurt
January
sales.
But
demand
rebounded
in
the
rest
of
the
quarter
to
offset
the
sluggish
first
month.

Chipotle
has
become
the
rare
restaurant
chain
to
report
rising
transactions
despite
higher
menu
prices.
The
company
once
again
raised
its
prices
in
October,
citing
inflation.
Others
in
the
restaurant
industry
have
turned
to
limited-time
offers
and
deals
to
appeal
to
customers,
particularly
those
with
lower
incomes.

CEO
Brian
Niccol
said
the
company
saw
traffic
growth
across
income
groups
during
the
quarter.
He
credited
the
chain’s
value
perception
among
diners.
Previously,
executives
have
also
emphasized
that
most
of
its
customers
come
from
higher-income
brackets.

Earlier
this
month,
Chipotle
raised
prices
in
California
roughly
7%
to
offset
the
state’s
higher

minimum
wage
for
fast-food
workers,
but
the
company
does
not
have
plans
for
any
more
hikes,
Niccol
said
on
CNBC’s “Closing
Bell”
on
Wednesday.

Chipotle
has
also
been
focusing
on
making
its
burritos
and
bowls
more
quickly,
improving
the
industry
metric
known
as
throughput.
Niccol
said
throughput
reached
its
highest
level
in
four
years
during
the
first
quarter.

The
chain
added
47
new
locations
to
its
footprint
during
the
first
quarter,
inching
closer
to
its
long-term
goal
of
doubling
its
total
number
of
restaurants
to
reach
7,000
stores.

For
the
full
year,
Chipotle
now
anticipates
same-store
sales
will
grow
by
a
mid-to-high
single-digit
percentage,
up
from
its
prior
range
of
a
mid-single-digit
increase.
The
company
reiterated
its
forecast
of
285
to
315
new
locations
in
2024.

In
March,
Chipotle’s
board
approved
a
50-for-1
stock
split,
one
of
the
largest
in
the
New
York
Stock
Exchange’s
history.
The
company
is
seeking
shareholder
approval
at
its
annual
meeting
on
June
6.
If
investors
vote “yes,”
the
stock
will
start
trading
on
a
post-split
basis
on
June
26.