Chipotle Profits Beat Expectations Despite Higher Costs, Omicron
Chipotle Mexican Grill Inc has beaten Wall Street estimates for quarterly profits and comparable sales as higher demand and prices for its burritos and rice bowls helped the restaurant chain shrug off a knock from the Omicron variant.
Surging COVID-19 Cases Impact
Surging COVID-19 cases forced many restaurants to trim store hours amid a labour shortage, and rising costs caused other chains including McDonald's Corp and Starbucks Corp to miss profit estimates.
"Pressure On Wages"
"We continue to see pressure on wages. We want to make sure that we continue to be competitive on that front," CEO Brian Niccol said during an earnings call. "Our restaurants are staffed better than they were pre-COVID."
Order-Ahead Drive-Through Lanes And New Menu Items
Chipotle's move to introduce order-ahead drive-through lanes at more locations, as well as new menu items including smoked brisket, also helped cushion the blow.
Adjusted Earnings Per Share
The chain reported adjusted earnings per share of $5.58 versus estimates of $5.25.
Hiked Menu Prices
Higher-than-anticipated beef and freight costs prompted it to hike menu prices 4% in December, but the company has seen "no resistance" to higher prices, Niccol said.
Digital sales grew 3.8% and made up 41.6% of sales in the quarter.
Goals For Opening New Locations
The company also raised its goal for opening new locations over time in North America to at least 7,000 versus 6,000 previously - particularly in smaller towns.
The burrito chain's comparable sales rose 15.2% in the fourth quarter ended 31 December, while analysts polled by Refinitiv expected 14.8% growth.
Comparable Restaurant Sales Growth Forecast
The company forecast comparable restaurant sales growth in the range of mid-to-high single digits in the current quarter, compared with estimates of 7.6% growth.