Chipotle reports growth in sales and traffic despite cost pressures

Summarised from 2 outlets · Updated 29 Oct, 22:15 · Archive

Chipotle's sales and customer traffic grew in the third quarter despite rising costs, with the chain raising menu prices by roughly 3% in the fourth quarter.

Chipotle reported third-quarter earnings on Wednesday, with net sales rising 9.6% to $3.29 billion as the company opened 84 company-owned restaurants and five international locations. Customer traffic and same-store sales grew during the quarter, with low-income consumers spending more despite broader industry headwinds. The company opened 84 company-owned restaurants and five international locations during the quarter.

However, operating margins contracted. Restaurant-level operating margin fell to 23.3% from 24.5% a year earlier, as rising costs squeezed profitability. Net income declined to $339.9 million from $382.1 million. Chief Financial Officer Adam Rymer said Chipotle expects fourth-quarter same-store sales growth of about 2%.

To offset inflation, Chipotle has been gradually raising menu prices market by market since late last year. Price increases contributed 2.7% impact in the third quarter and are expected to reach about 3% in the fourth quarter. Food, beverage and packaging costs fell to 29.5% of revenue from 30% a year earlier, helped by the price increases partly offsetting higher beef and freight expenses. Labour costs rose to 25.7% of revenue from 25.2%, driven by higher wages and additional restaurant staffing.

CEO Scott Boatwright expressed confidence about the remainder of the year. Shares rose about 7% to 9% in extended trading following the announcement.

How it is being reported

• Chipotle stock soars after chain reveals menu price increases will reach 3% in fourth quarter as costs climbChipotle shares surged after the burrito-and-bowl chain reported improving sales and revealed roughly 3% menu price hikes in the fourth quarter amid rising beef, freight and labor costs.New York Post · 29 Oct, 21:53
• Chipotle Mexican Grill is about to report earnings. Here's what to expectChipotle's stock has fallen about 22% so far this year, dragging its market cap down to about $36 billion.CNBC · 28 Oct, 19:30

In this story: Chipotle Mexican Grill · Scott Boatwright · Adam Rymer

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