The chain of burritos seen an increase in customers despite criticism on social media over costs and serving sizes.
Chipotle Mexican Grill defied industry slowness by reporting quarterly profitability and sales on Wednesday that above analysts’ projections due to increased foot traffic at its locations.
Following the closing bell, the company’s shares increased. Due to investor worries about the state of the restaurant business, Chipotle’s stock had fallen 17% as of Wednesday’s closure. Towards the end of June, the business divided its shares 50 to 1.
After a year of $341.8 million, or 25 cents per share, the burrito company posted second-quarter net income of $455.7 million, or 33 cents per share. Price increases that helped offset increased avocado costs and more oil used to cook tortilla chips this quarter are what caused Chipotle’s earnings to increase compared to the same time last year.
Chipotle made 34 cents per share when goods were excluded.
To $2.97 billion, net sales increased 18.2%.
The firm exceeded StreetAccount’s projections of 9.2% in Q3 with an 11.1% increase in same-store sales.
CEO Brian Niccol said on CNBC’s “Closing Bell: Overtime” on Wednesday that the demand for the company’s meals peaked in April. June’s same-store sales ended up being around 6% higher. Executives said that because of the Fourth of July vacation, Texas weather delays, and a recent tech breakdown, July has been more challenging to comprehend.
Its restaurants saw an 8.7% increase in traffic in spite of social media reaction from customers complaining that their burrito bowls were smaller. The business has refuted claims that it is cutting portions.
On the company’s conference call, Niccol informed investors, “We have focused in on those with outlier portion scores based on consumer surveys, and we are re-emphasizing training and coaching around ensuring we are consistently making bowls and burritos correctly.” As a fundamental component of Chipotle’s brand identity, “we have also leaned in and re-emphasized generous portions across all of our restaurants.”
According to Niccol, restaurant sales increased across all income brackets. Recently, a number of consumer corporations have expressed concern about the decline in low-income client base, putting pressure on their sales. These companies include PepsiCo and McDonald’s. Like many other fast-casual companies, Chipotle enjoys the advantages of a client base that is often higher affluent.
In March, the restaurant chain reintroduced its chicken al pastor as a temporary menu item. Additionally, more customers are placing orders for its barbacoa, which changed its moniker earlier this year to include “braised beef” in an effort to increase awareness among consumers.
During the quarter, Chipotle established 52 new company-owned locations and one new restaurant with a license from outside the country.
The business restated its forecast for same-store sales growth in the mid- to high-single digit range for the whole year. Additionally, Chipotle anticipates opening 285–315 additional locations this year.
