A Chipotle restaurant in New York on July 3, 2023.
Jeenah Moon | Bloomberg | Getty Images
Chipotle Mexican Grill On Wednesday, it reported quarterly earnings and revenue that beat analysts' expectations as it saw increased traffic at its restaurants, despite an industry slowdown.
The company’s shares rose about 13% in after-hours trading before giving up most of those gains and closing up about 3%. As of Wednesday’s close, Chipotle shares had fallen 17% this month, hurt by investor concerns about the health of the restaurant industry. In late June, the company executed a 50-for-1 stock split.
Here's what the company reported for the quarter ended June 30 compared with what Wall Street expected, according to a survey of analysts by LSEG:
- Earnings per share: 34 cents adjusted vs. 32 cents expected
- Revenue: $2.97 billion vs. $2.94 billion forecast
The burrito chain reported second-quarter net income of $455.7 million, or 33 cents a share, compared with $341.8 million, or 25 cents a share, a year earlier. Chipotle's profit rose from the year-ago period as price increases helped offset higher avocado prices and increased oil use in frying tortilla chips this quarter.
Excluding one-time items, Chipotle earned 34 cents per share.
Net sales increased 18.2% to $2.97 billion.
The company's same-store sales rose 11.1% in the quarter, beating StreetAccount estimates of 9.2%.
Demand for its food products peaked in April, Chief Executive Brian Niccol said on CNBC's “Closing Bell: Overtime” on Wednesday. Same-store sales rose about 6% in June. Executives said July has been more difficult to navigate, given the July 4 holiday, weather disruptions in Texas and a recent technology outage.
Traffic to its restaurants increased by 8.7% despite negative reactions on social media from customers who said its burrito bowls are smaller. The company has denied reducing its portions, but is now training its employees to ensure that customers are happy with the size of their burrito bowls, which will put some pressure on profit margins.
“We've been focusing on those who have outlier portion scores based on consumer surveys, and we're putting a new emphasis on training and coaching to ensure we're always preparing bowls and burritos correctly,” Niccol told analysts on the company's conference call. “We've also put a new emphasis on generous portions across all of our restaurants, as it's a core brand value of Chipotle.”
The company is also gaining market share and restaurant transactions grew across all revenue levels, Niccol said. Other consumer companies, from PepsiCo to McDonald'sIn recent months, they have said that lower-income customers are choosing to leave more, putting pressure on their sales. Chipotle, like many fast-casual chains, benefits from a customer base that tends to have higher incomes.
The chain brought back its pollo al pastor in March as a limited-time menu item. More customers have also been ordering its barbacoa, which it renamed earlier this year and added “carne braseada” to make customers more familiar with the option.
Chipotle opened 52 new company-owned locations and one new internationally licensed restaurant during the quarter.
The company reiterated its full-year forecast that same-store sales will grow by a mid- to high-single-digit percentage. Chipotle also expects to open between 285 and 315 new restaurants this year.
