Chipotle Mexican Grill on Tuesday reported mixed quarterly results despite another quarter of higher traffic to its restaurants.
Shares of the company fell 3% in extended trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: 27 cents adjusted vs. 25 cents expected
- Revenue: $2.79 billion vs. $2.82 billion expected
Chipotle reported third-quarter net income of $378.4 million, or 28 cents per share, up from $313.2 million, or 23 cents per share, a year earlier.
The company’s food and beverage costs increased during the quarter, in part due to Chipotle’s decision to reemphasize generous portions after social media-fueled backlash over the size of its burrito bowls this summer.
Excluding items, the company earned 27 cents per share.
Net sales climbed 13% to $2.79 billion.
Same-store sales rose 6%, just shy of StreetAccount estimates of 6.3%. Traffic to restaurants increased 3.3% in the quarter, continuing the chain’s streak of bucking an overall slump in foot traffic across the industry. While many consumers have opted to eat out less, Chipotle has benefited from having a wealthier customer base that is willing to pay more for its burritos and bowls.
“We’re seeing growth from all income cohorts at present,” interim CEO Scott Boatwright said on CNBC’s “Closing Bell: Overtime” on Tuesday.
While demand was weaker at the start of the third quarter, Boatwright said sales accelerated throughout the period, particularly as Chipotle reintroduced its smoked brisket. The limited-time menu item is currently the most expensive protein, topping even the chain’s steak and beef barbacoa options.
Boatwright, formerly Chipotle’s chief operating officer, stepped in to lead the company after former CEO Brian Niccol departed in late August to pilot Starbucks’ turnaround. On the company’s conference call on Tuesday, Boatwright reassured investors that the chain’s strategy is not changing despite the leadership shake-up.
“I have worked alongside our talented executive team to craft and evolve our successful strategy, and we will continue to execute against it,” he said.
Digital sales accounted for 34% of the chain’s quarterly food and beverage revenue.
The company opened 86 new locations during the quarter, 73 of which included a “Chipotlane” dedicated to online order pickup.
Chipotle is also investing in new equipment to improve its preparation and cooking. The company plans to roll out new produce slicers to all restaurants by next summer. Chipotle has also added dual-sided grills to 74 restaurants and will announce early next year its strategy to add the equipment to new and existing restaurants.
For the full year, Chipotle reiterated its outlook that same-store sales will grow by a mid- to high-single-digit percentage. The company also anticipates it will open between 285 and 315 new restaurants this year.
Looking to 2025, Chipotle plans to open between 315 and 345 new locations. More than 80% of those restaurants will include a Chipotlane.