Chipotle Mexican Grill Inc. reported first-quarter earnings and revenue on Tuesday to beat Wall Street estimates, buoyed by higher menu prices, the opening of 41 new restaurants and some recovery in consumption by lower-income customers. The announcement sent the stock skyrocketing in after-hours trading.
The company said it expects mid- to high-single digit growth in comparable-store sales for the second quarter and full year. Analysts expected growth of 5.7% and 5.9%, respectively.
Shares of Chipotle (NYSE:CMG) rose 7.87% in after-hours trading on Tuesday following the announcement. Chipotle originally means smoked and dried jalapeño in the Aztec language. In the summer of 1993, Steve Ells, an American, opened the first store in Denver, Colorado.
Higher-income customers at Mexican fast-food restaurant chain Chipotle are eating the company’s dishes and burritos more often, CEO Brian Niccol said during an earnings call. Low-income customers are also eating at Chipotle more often than before, but their visits have yet to return to what they were a year ago, he added.
“We saw significant improvement in all income cohorts,” said Nicole. People with a household income of at least $100,000 make up a larger customer base for Chipotle than any other fast food and fast casual brand.
Even with inflation straining household budgets, the restaurant chain is expected to post higher sales growth in the first quarter.
McDonald’s (NYSE:MCD) said its global comparable-store sales increased 12.6% in the first quarter as US consumers continued to dine out.
California-based Chipotle’s comparable sales increased about 11% in the first quarter. According to Refinitiv, analysts were expecting an average increase of 8.6%.
Lower avocado costs have helped margins, but may not last. Inflation in the second half of the year is a “really wild card,” Chief Financial Officer Jack Hartung said on the earnings call.
In part because of lower avocado costs and lower shipping costs as shipments declined, Chipotle’s restaurants were more profitable, with store-level operating margins rising to 25.6% from 20.7% a year earlier.
Net income was $291.6 million, or $10.50 per diluted share. That beat analyst expectations of $248.4 million and $8.92. Earnings-per-share increased 84% from last year on an adjusted basis.