![Chipotle Beats Earnings and Revenue Expectations, Sees Restaurant Traffic Increase Chipotle Beats Earnings and Revenue Expectations, Sees Restaurant Traffic Increase](https://image.cnbcfm.com/api/v1/image/107277186-1690391604401-gettyimages-1553802110-CHIPOTLE_EARNS.jpeg?v=1721825412&w=1920&h=1080)
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Chipotle Mexican Grill on Wednesday reported quarterly earnings and revenue that beat analysts’ expectations, as traffic to its restaurants increased despite the industry downturn.
The company’s shares rose about 13% in extended trading before giving up most of those gains and settling about 3% higher. As of Wednesday’s close, Chipotle shares had fallen 17% this month, hit by investor concerns about the health of the restaurant industry. In late June, the company executed a 50-for-1 stock split.
Quarterly Results
For the quarter ended June 30, Chipotle reported:
- Earning per share: 34 cents adjusted vs. 32 cents expected
- Income: $2.97 billion versus the expected $2.94 billion
The burrito chain reported second-quarter net income of $455.7 million, or 33 cents a share, up from $341.8 million, or 25 cents a share, a year earlier. Chipotle’s earnings increased from the same period a year earlier as price increases helped offset higher avocado prices and the increased use of oil to fry tortilla chips this quarter.
Excluding special items, Chipotle earned 34 cents a share.
Net sales increased 18.2% to $2.97 billion.
The company’s traditional store sales rose 11.1% in the quarter, beating StreetAccount estimates of 9.2%.
Increased demand and traffic
Food demand peaked in April, CEO Brian Niccol told CNBC. Same-store sales stabilized at about 6% higher in June. Executives said July was harder to gauge because of the Fourth of July holiday, weather disruptions in Texas and a recent technology outage.
Restaurant traffic increased 8.7% despite backlash on social media from customers who said the burrito bowls were smaller. The company denied it had reduced portions, but is now training employees to ensure customers are happy with the size of their burrito bowls, which could put some pressure on profit margins.
“We’ve been focusing on those with abnormal portion scores based on consumer surveys and are reiterating the importance of training and coaching to ensure we get bowls and burritos right every time,” Niccol told analysts on the company’s conference call. “We’ve also emphasized the importance of generous portions across all of our restaurants, as it’s a core value of the Chipotle brand.”
Market growth and new products
The company is also gaining market share, and restaurant transactions have increased across all income levels. Other consumer companies, from PepsiCo to McDonald’s, have said in recent months that lower-income customers are increasingly opting out, putting pressure on their sales. Chipotle, like many fast-casual chains, benefits from a customer base that tends to earn more.
The chain reintroduced its pollo al pastor in March as a limited-time menu item. More customers have also been ordering its barbacoa, which it renamed “braised beef” earlier this year to raise customer awareness of the option.
During the quarter, Chipotle opened 52 new company-owned restaurants and one new internationally licensed restaurant.
The company reiterated its full-year outlook, which calls for same-store sales growth in the mid- to high-single digits. Chipotle also plans to open between 285 and 315 new restaurants this year.
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