Chipotle Sales Top Estimates as Diners Shrug Off Higher Prices

Chipotle Mexican Grill Inc. reported sales that exceeded analysts’ expectations for its latest quarter -- a sign of consumer resilience in the face of recent menu price hikes.

  • The closely watched metric of comparable sales rose 31.2% in the second quarter, outpacing analysts’ projection for a jump of nearly 30%. The company also posted restaurant margin, which is an important measure of profitability, that outpaced expectations.

Key Insights

  • Chief Executive Officer Brian Niccol said the results demonstrate “growing momentum” as the company seeks to boost sales and adds drive-thrus. While Chipotle didn’t give a full-year sales forecast, it said the business is trending up in the current quarter. Comparable sales should climb in the low to mid-double digits in the third quarter, and the company expects to open about 200 new locations this year.
  • The restaurant-level operating margin was 24.5%, roughly double the level from a year ago. The company attributed the performance in part to higher menu prices, fewer promotions and lower beef prices. Those were offset partially by wage inflation.
  • The company said that food, beverage and packaging costs fell as a percentage of revenue from a year earlier. They attributed this to price increases, which were partially offset by higher costs associated with new menu items, like quesadillas.

Market Reaction

  • The shares rose 4.7% in late trading in New York Tuesday. The stock has advanced 14% this year through Tuesday’s close.

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