Chipotle Mexican Grill’s first-quarter earnings and revenue exceeded analysts’ expectations, with the company reporting adjusted earnings per share of $13.37 versus an expected $11.68, and revenue of $2.7 billion compared to an anticipated $2.68 billion. The stock rose 4% in extended trading as a result. The company’s net income for the quarter was $359.3 million, or $13.01 per share, up from $291.6 million, or $10.50 per share, in the previous year. Despite a 36-cent hit from legal reserves, Chipotle still earned $13.37 per share, while net sales increased by 14.1% to $2.7 billion. Same-store sales grew by 7%, surpassing StreetAccount estimates of 5.2%, with traffic up 5.4% and average check rising by 1.6%.
Chief Financial Officer Jack Hartung had previously attributed lower January sales to adverse weather conditions, but Chipotle saw a rebound in demand throughout the rest of the quarter. The company has managed to increase transactions despite raising menu prices in October due to inflation, distinguishing itself from other restaurant chains that have had to rely on promotions to attract customers. Although Chipotle recently raised prices in California to accommodate the higher minimum wage for fast-food workers, CEO Brian Niccol stated that there are no additional price hikes planned. Chipotle opened 47 new locations in the first quarter, moving closer to the goal of doubling its restaurant count to 7,000 stores.
Chipotle has adjusted its full-year same-store sales growth forecast to a mid-to-high single-digit percentage, an increase from the previous prediction of a mid-single-digit rise. The company also reiterated its plan to open between 285 and 315 new locations by 2024. In March, Chipotle’s board approved a 50-for-1 stock split, pending shareholder approval at the upcoming annual meeting on June 6. If approved, the split will be effective on June 26. This stock split is one of the largest in the history of the New York Stock Exchange.
Chipotle’s success in surpassing expectations for the quarter can be attributed to increased traffic to its restaurants, with a 7% rise in same-store sales driving revenue growth. While the company has raised menu prices to counter inflation, it has not implemented any additional price increases despite recent changes in minimum wage legislation. With a solid plan for new store openings and strong forecasted sales growth, Chipotle is well-positioned to continue its positive performance in the coming years. Investors have responded positively to the company’s earnings report, as reflected in the 4% stock price increase in extended trading following the announcement.
