- First quarter results come in ahead of expectations
- EPS up more than 80%
- Margins improve and company outlines plans for roll-out of new restaurants
Shares in US burrito chain Chipotle Mexican Grill (CMG:NYSE) caused a stir on Wall Street gaining over 7% in after-hours trading to hit $1,917.20, as its first-quarter results beat analysts’ expectations.
Brian Niccol, chairman and CEO, Chipotle said: ‘Our strong performance in the first quarter confirms that our focus on getting back to the basics and re-establishing Chipotle's standards of excellence is beginning to drive results.
‘We will continue to develop exceptional people and prepare exceptional food while treasuring each guest to further strengthen our foundation for sustained long-term growth.’
BIG SALES INCREASE
The fast-casual restaurant chain said total revenue increased 17.2% to $2.4 billion and comparable restaurant sales increased by 10.9% for the three months ending 31 March 2023.
In-restaurant sales increased 22.9%, while digital sales represented 39.3% of food and beverage revenue.
Earnings per share was $10.50, an 84.2% increase compared to $5.70 in the prior year.
CONTINUING ROLL-OUT OF NEW RESTAURANTS
Amid a backdrop of squeezed US household incomes, Chipotle saw the return of its customer base despite higher menu prices.
It also announced that it had opened 41 restaurants with 34 locations including a Chipotle to meet demand among its lower-income customers.
For the rest of 2023 it expects 255 to 285 new restaurant openings (including 10 to 15 relocations to add a Chipotle).
Chipotle said restaurant level operating margin was 25.6% compared to 20.7% in the first quarter of 2022: ‘The improvement was primarily due to the benefit of sales leverage and, to a lesser extent, lower avocado prices and lower delivery expense due to lower delivery volumes. These decreases were partially offset by higher inflation across several food costs and to a lesser extent, wage inflation.’
A BRIGHT OUTLOOK
Despite rising food inflation and a possible recession in the US, Chipotle said it expects second quarter and full-year comparable sales growth in the ‘mid to high-single digit range’.
Analysts were expecting a growth of 5.7% and 5.9% respectively.
Chipotle’s menu prices were about 10% higher in the first quarter versus last year, but they will be only about 5% higher in the second quarter as previous price hikes roll off, chief restaurant officer Scott Boatwright told Reuters.
The fast-food chain said that it had no plans to increase prices for the rest of the year.
