Chipotle Mexican Grill Inc. sank in late trading after profitability and a key measure of sales fell short of Wall Street’s expectations, showing that stubbornly high inflation is having an impact on the burrito chain’s operations. The shares fell in late trading.
(Bloomberg) — Chipotle Mexican Grill Inc. sank in late trading after profitability and a key measure of sales fell short of Wall Street’s expectations, showing that stubbornly high inflation is having an impact on the burrito chain’s operations. The shares fell in late trading.
- Comparable sales of 5.6% in the fourth quarter were below the average estimate for 7% growth compiled by Bloomberg.
- See more details.
Key Insights
- Chipotle’s results may indicate that economic volatility and high inflation are beginning to crimp consumer demand for discretionary items like restaurant meals. The company noted that sales were driven by menu price increases. Restaurant peers have reported a similar trend in recent quarters.
- Restaurant margin was 24% in the quarter, compared with an average estimate of more than 25%. The chain reported higher costs for wages and food, although the higher menu prices helped offset them. While inflation’s rise has slowed from earlier months, it’s still broadly increasing — and it’s having an impact across the food-service industry.
- The chain is focused on opening new stores, and recruiting and retaining workers in the face of “a challenging and fluid macro environment,” Chief Executive Officer Brian Niccol said in a statement. Chipotle opened 100 new locations, with 90 having drive-thrus, according to the statement. The company is targeting 7,000 locations in the long term, up from almost 3,200 today.
Market Reaction
- Chipotle’s shares fell 4.3% in extended trading at 4:23 p.m. New York time. The stock has risen 24% so far this year through Tuesday’s close.
Get More
- Read the statement.
- See Chipotle estimates.
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