Chipotle Mexican Grill, the popular fast-casual restaurant chain known for its burritos, has exceeded earnings expectations for the first quarter of this year. The company reported quarterly earnings per share of $13.37, beating the expected $11.68. Additionally, Chipotle’s revenue reached $2.7 billion, surpassing the estimated $2.68 billion. This positive news has led to a significant surge in the company’s share value, with a 4% increase in after-hours trading.
The increase in earnings and revenue can be attributed to higher traffic at Chipotle’s restaurants. The company’s same-store sales rose by 7%, surpassing estimates of 5.2%. Chipotle reported a 5.4% increase in traffic compared to the previous year, while the average check only rose by 1.6%. This indicates that despite higher menu prices, customers are still flocking to Chipotle.
Chief Financial Officer Jack Hartung had previously mentioned that January sales were impacted by “unusually cold weather.” However, the rest of the quarter saw a rebound in demand, offsetting the slow start. This resilience is noteworthy in an industry where rising transactions are uncommon, especially considering higher menu prices.
Chipotle has been proactive in addressing rising costs. In October, the company raised its prices due to inflation. Additionally, it recently raised prices in California to compensate for the state’s higher minimum wage for fast-food workers. CEO Brian Niccol stated that there are no plans for further price hikes at the moment.
Expansion is also a key focus for Chipotle. The company added 47 new locations during the first quarter, bringing it closer to its goal of doubling its total number of restaurants to reach 7,000 stores. Chipotle anticipates a mid-to-high single-digit percentage growth in same-store sales for the full year, up from its previous forecast of a mid-single-digit increase. The company also reiterated its plan to open 285 to 315 new locations by 2024.
In March, Chipotle’s board approved a 50-for-1 stock split, which is one of the largest in the New York Stock Exchange’s history. Shareholders will vote on this proposal at the annual meeting on June 6. If approved, the stock will begin trading on a post-split basis on June 26.
Overall, Chipotle’s strong performance in the first quarter has exceeded expectations and resulted in a surge in the company’s share value. With rising transactions, successful price adjustments, and plans for expansion, Chipotle seems to be on a positive trajectory. Investors and customers alike will be watching closely to see if the company can maintain this momentum in the coming months.
