Chipotle Mexican Grill (CMG) Q1 2023 results
Chipotle Mexican Grill on Tuesday reported quarterly earnings and sales that beat analysts’ expectations, driven by better-than-expected same-business sales growth.
How MC Donalds, Chipotle said traffic to its restaurants increased during the first quarter despite higher menu items. Chipotle’s menu prices are up about 10% year over year. CEO Brian Niccol said the chain has shown it has pricing power.
“We don’t want to be ahead of the inflationary environment, but we also don’t want to lag behind,” he said on the company’s conference call.
Pedestrians wearing protective masks walk in front of a Chipotle restaurant on April 19, 2021 in San Francisco, California.
David Paul Morris | Bloomberg | Getty Images
Chipotle is pausing price increases for now, Niccol said on CNBC’s “Closing Bell”.
The company’s shares rose more than 7% in extended trading.
Here’s what the company reported, compared to Wall Street expectations, based on a poll of analysts by Refinitiv:
- Earnings per share: $10.50 versus $8.92 expected
- Revenue: $2.37 billion versus $2.34 billion expected
Chipotle reported net income of $291.6 million, or $10.50 per share, for the first quarter, up from $158.3 million, or $5.59 per share, a year ago. The company’s menu price increases and lower avocado prices helped improve profit margins compared to the prior-year period.
revenue rose 17.2% to $2.37 billion from $2 billion in the same period last year. Same-store sales rose 10.9%, beating StreetAccount’s estimate of 8.6%.
Niccol said higher-income consumers are more likely to return to restaurants. Even lower-income guests are coming more frequently than in the previous six months, although their traffic has continued to decline from last year. Overall, traffic increased about 4% for the quarter, reversing last quarter’s decline.
In February, executives said same-store sales grew double-digits in January. A year earlier, the company was seeing sluggish sales as the Omicron Covid outbreak put pressure on staffing levels and caused some temporary store closures.
Chipotle’s Chicken Al Pastor is on track to become the chain’s all-time favorite time-limited protein option, Niccol said on the company’s conference call. The company launched it in mid-March.
Digital orders accounted for nearly 40% of revenue for the quarter. Chipotle customers are ordering their burritos and tacos in-person more frequently compared to the same period last year.
Executives also outlined changes for restaurants to improve service speed and accuracy. The chain has tested new grills that cook faster and more evenly. It has also been experimenting with staffing its two production lines to keep up with demand from both in-person guests and digital orders.
The company opened 41 new locations in the quarter, 34 of which contained its drive-through lanes reserved for digital order pickup.
Looking ahead for the rest of the year, Chipotle expects revenue to grow in the mid- to high-single digits. The company expects the same range for second-quarter same-store sales growth, which is roughly in line with StreetAccount’s estimate of 5.8%.
The company reiterated its plans to open between 255 and 285 new restaurants in 2023.