Restaurants

Chipotle earnings beat estimates as customers paid more, helping offset surging costs

Key Points
  • Chipotle Mexican Grill's first-quarter earnings and revenue topped Wall Street's estimates.
  • The company's restaurant operating margins shrank as it paid more for beef, avocados, paper and labor.
  • Prices are up about 10% compared with the year-ago period, but executives said they have seen "very little resistance" from consumers so far.
  • Same-store sales climbed 9% in the quarter, beating StreetAccount estimates of 7.9%.

In this article

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Chipotle beats on top and bottom lines, and same-store sales by 9%

Chipotle Mexican Grill's quarterly earnings and revenue topped Wall Street's estimates, fueled by consumers' willingness to pay more for their burritos and bowls.

Shares of the company rose about 3% in extended trading.

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

  • Earnings per share: $5.70 adjusted vs. $5.64 expected
  • Revenue: $2.02 billion vs. $2.01 billion expected

The restaurant chain reported first-quarter net income of $158.3 million, or $5.59 per share, up from $127.1 million, or $4.45 per share, a year earlier. 

Chipotle's restaurant operating margins shrank as it paid more for beef, avocados, paper and labor. However, menu price hikes and lower delivery costs helped offset those higher costs.

"Although our restaurant margins remain bumpy due to inflation, we have the ability to be patient while costs are volatile, and the growth in pricing power to recover our margins over time," CEO Brian Niccol said on the company's conference call with analysts.

Prices are up about 10% compared with the year-ago period, including a 4% increase at the end of the first quarter, but executives said they have seen "very little resistance" from consumers so far.

Excluding corporate restructuring costs, certain legal expenses and other items, Chipotle earned $5.70 per share, beating the $5.64 per share expected by analysts surveyed by Refinitiv.

Net sales rose 16% to $2.02 billion, topping expectations of $2.01 billion. 

Same-store sales, which tracks sales at locations open at least 13 months, climbed 9% in the quarter. Chipotle had warned previously that the omicron variant and winter storms hurt January storms, but the chain topped StreetAccount estimates of 7.9% for its same-store sales growth.

In-person sales jumped by a third compared with the year-ago period, but digital transactions still accounted for 41% of total orders.

Chipotle opened 51 new locations during the quarter, most of which had digital-only drive-thru lanes, or "Chipotlanes." 

The company didn't provide an outlook for the full year but said it expects same-store sales growth in the second quarter between 10% to 12%, assuming that current trends persist. Wall Street was anticipating that same-store sales next quarter would increase by 9.3%, according to StreetAccount.

Read the full earnings report here.

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