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Chipotle Beats Estimates For Earnings And Comparable Quarterly Sales

Published on Jul 21 2021 2:00 PM in Restaurant tagged: Chipotle Mexican Grill / Chipotle

Chipotle Beats Estimates For Earnings And Comparable Quarterly Sales

Chipotle Mexican Grill Inc has beaten estimates for earnings and comparable quarterly sales, but warned that higher beef and freight costs will offset the benefit of menu prices hikes in the near term...

Chipotle Mexican Grill Inc has beaten estimates for earnings and comparable quarterly sales, but warned that higher beef and freight costs will offset the benefit of menu prices hikes in the near term.

Restaurants have been plagued by outages of everything from green tea to paper bags, as well as labour shortages, as the US economy has reopened following COVID-19 pandemic-related lockdowns.

In the current quarter, commodity costs and staffing shortages at suppliers will mostly cancel out the 3.5% to 4% menu price increase originally implemented to pay for higher wages, Chipotle chief financial officer Jack Hartung said in a call with analysts.

"It shouldn't be a surprise to anyone that Q3 is going to be challenged by several industry-wide issues," Hartung said.

Sales at the burrito and bowl chain, which had already recovered during the COVID-19 pandemic, grew even stronger as restrictions eased and Americans trickled back to offices and ordered more lunch.

Statistics

Excluding one-time items, the company posted earnings per share of $7.46 for the second quarter ended June 30, crushing estimates of $6.52 and sending shares up more than 4% in extended trading.

Comparable sales rose by 31.2%, ahead of Wall Street expectations of 29.4% growth, according to IBES data from Refinitiv.

Chipotle said that it is expecting third-quarter sales growth in the low to mid double-digits range, compared with estimates of 9.7%.

Net income was approximately $188 million, or $6.60 per share, for the quarter, compared with $8.2 million, or 29 cents per share, a year earlier.

Restaurant operating margin was 24.5%, which was an increase from 12.2% in the second quarter of 2020 and the highest level since the third quarter of 2015.

Higher margins came despite raising employee pay to an average $15 an hour by late June, thanks to menu price hikes.

So far the company has seen "no resistance" to higher menu prices, Hartung said.

The chain also opened 56 new locations during the quarter, including 45 with order-ahead drive-through "Chipotlanes," putting it on track to meet or slightly exceed its previous expectation of building approximately 200 new restaurants this year.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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