A price hike in November may have been the catalyst that Chipotle Mexican Grill needed.
The burrito chain posted better-than-expected fourth-quarter earnings on Tuesday, citing an increase in average check despite slowing foot traffic.
Shares of the company whipsawed in aftermarket trading, rising as much as 5 percent before turning down 3 percent.
Chipotle said that net income rose 3.9 percent to $43.8 million, or $1.55 per share, from $16 million, or 55 cents per share, a year ago.
Excluding items, the burrito chain earned $1.34 per share on an adjusted basis.
Revenue rose 7.3 percent to $1.11 billion, in-line with Wall Street expectations.
- Adjusted EPS: 1.32 cents ex. items vs. 1.34 cents expected according to Thomson Reuters
- Revenue: $1.11 billion in line with $1.11 billion projected, according to Thomson Reuters
- Same-store sales up 0.9 percent vs. 0.8 percent growth projected, according to StreetAccount
Same-store sales for the company rose 0.9 percent in the quarter, higher than the 0.8 percent Wall Street had forecast, according to StreetAccount.
The company said that higher menu prices, which it began to institute last April, helped boost ticket averages. Chipotle initiated the final wave of these price hikes in January, bumping up prices by 5 to 7 percent in markets that did not already see increases in 2017.
These price increases, as well as a decrease in how much was spent on marketing, helped the chain's margins, especially as it faced higher labor and commodity costs. Chipotle said that its operating margin was 16.9 percent for 2017, up from 12.8 percent the year before.
In addition, the tax law change resulted in a savings of between $40 million to $50 million for the company. CFO Jack Hartung said that one-third of this benefit will go directly to Chipotle employees.
Hourly crew members will be eligible to earn a $250 bonus and its general managers will be able to earn $1,000.
"During 2017, we have made considerable changes around leadership, operations, and long-term planning and it is clear that, while there is still work to be done, we are starting to see some success," CEO Steve Ells said in a statement.
Ells is set to step down from his position as CEO as soon as the company finds a suitable replacement. On Tuesday, Ells said that Chipotle is "making good progress" in its search.
The company said that it expects same-store sales in 2018 to rise at a low-single digit pace. It also expects to open between 130 and 150 new stores.
"Our focus this year will be to continue perfecting the dining experience, enhancing the guest experience through innovations in digital and catering, and reinvesting in our restaurants," Ells said.