A customer holds a bag of food outside a Chipotle restaurant in New York on January 12, 2024.
Mordant Angus | Bloomberg | fake images
Chipotle Mexican Grill on Tuesday reported mixed quarterly results despite another quarter of increased traffic to its restaurants.
The company's shares fell 3% in extended trading.
Here's what the company reported compared to what Wall Street expected, according to a survey of analysts by LSEG:
- Earnings per share: 27 cents adjusted vs. 25 cents expected
- Revenue: $2.79 billion vs. $2.82 billion expected
Chipotle reported third-quarter net income of $378.4 million, or 28 cents per share, down from $313.2 million, or 23 cents per share, a year earlier.
The company's food and beverage costs rose during the quarter, in part due to Chipotle's decision to reemphasize generous portions after social media-fueled backlash over the size of its burrito bowls this summer.
Excluding items, the company earned 27 cents per share.
Net sales rose 13% to $2.79 billion.
Same-store sales rose 6%, just shy of StreetAccount estimates of 6.3%. Traffic to restaurants increased 3.3% in the quarter, continuing the chain's streak of offsetting an overall decline in foot traffic across the industry. While many consumers have chosen to eat out less, Chipotle has benefited from having a wealthier customer base willing to pay more for its burritos and bowls.
“We're seeing growth across all income groups today,” interim CEO Scott Boatwright said on CNBC's “Closing Bell: Overtime” on Tuesday.
While demand was weaker at the start of the third quarter, Boatwright said sales accelerated during the period, particularly when Chipotle reintroduced its smoked brisket. The limited-time menu item is currently the most expensive protein, surpassing even the chain's beef and barbecue options.
Boatwright, Chipotle's former chief operating officer, took over the company after former CEO Brian Niccol departed in late August to pilot starbucks' Turn around. On the company's conference call Tuesday, Boatwright assured investors that the chain's strategy will not change despite the change in leadership.
“I have worked alongside our talented executive team to design and develop our successful strategy, and we will continue to execute it,” he said.
Digital sales accounted for 34% of the chain's quarterly food and beverage revenue.
The company opened 86 new locations during the quarter, 73 of which included a “Chipotlane” dedicated to online order pickup.
Chipotle is also investing in new equipment to improve its preparation and cooking. The company plans to implement new fruit and vegetable slicers in all restaurants next summer. Chipotle has also added double-sided grills to 74 restaurants and will announce early next year its strategy to add the equipment to new and existing restaurants.
For the full year, Chipotle reiterated its outlook that same-store sales will grow by a mid- to high-single-digit percentage. The company also plans to open between 285 and 315 new restaurants this year.
Looking ahead to 2025, Chipotle plans to open between 315 and 345 new locations. More than 80% of those restaurants will include a Chipotlane.
