Chipotle Mexican Grill Inc.’s first-quarter sales and profit surpassed estimates on higher prices and lower avocado costs — the latest proof that companies’ higher prices are sticking as consumers pay up. The shares rose in late trading.
(Bloomberg) — Chipotle Mexican Grill Inc.’s first-quarter sales and profit surpassed estimates on higher prices and lower avocado costs — the latest proof that companies’ higher prices are sticking as consumers pay up. The shares rose in late trading.
The key measure of same-store sales rose 10.9% in the period, Chipotle said Tuesday. Analysts had projected an 8.5% increase, according to estimates compiled by Bloomberg. The burrito chain sees the measure growing in the mid to high single digits in the second quarter and for the full year, versus the average estimate of 6.1% for 2023.
Chipotle’s performance reinforces the resilience of US consumers as they continue spending on discretionary items such as dining out and convenience foods. The fast-casual chain has increased its menu prices in the face of higher wage and commodity costs. So far diners are keeping pace.
The company said higher prices and 41 new locations during the period — including 34 with drive thrus — bolstered sales. A new menu item, chicken al pastor, also helped, Chief Executive Officer Brian Niccol said during a call with analysts. He added that customer transactions were positive during the period — another sign that consumers are shaking off the effects of the pandemic.
Chipotle shares rose 8% at 4:52 p.m. in extended New York trading. The stock has advanced 28% in 2023 through Tuesday’s close, above the S&P 500 Index’s gain of just over 6%.
Earnings per share, excluding some items, were $10.50, above the average estimate of $8.92. Restaurant operating margin, a gauge of profitability, also beat expectations, driven by higher sales, lower avocado prices and lower delivery expenses in the period. Chipotle did cite ongoing inflation for ingredients such as tortillas, beans and rice, however, and executives on the call noted that avocado prices appear to be rising once again.
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