People go to a Chipotle restaurant on February 09, 2022 in Miami, Florida.
Joe Raedle | Getty Images
Chipotle Mexican Grill on Tuesday reported disappointing sales as price hikes helped boost profits but could have scared away some inflation-weary customers.
“The low-income consumer definitely has pulled back their purchase frequency,” CEO Brian Niccol said on the business’s conference call. “Fortunately for Chipotle, you understand, nearly all our customers certainly are a higher household income consumer.”
The business also said it could raise prices again in August, indicating that costs keep rising because of its restaurants.
Shares of Chipotle rose a lot more than 8% in extended trading.
Some tips about what the business reported weighed against what Wall Street was expecting, predicated on a survey of analysts by Refinitiv:
- Earnings per share: $9.30 adjusted vs. $9.04 expected
- Revenue: $2.21 billion vs. $2.24 billion expected
The burrito chain reported second-quarter net gain of $259.9 million, or $9.25 per share, up from $188 million, or $6.60 per share, per year earlier. The business said it faced higher charges for key ingredients like avocados, beef and dairy, which offset the power from price increases.
Excluding legal costs, restaurant closure expenses along with other items, Chipotle earned $9.30 per share in the quarter that ended June 30.
Net sales climbed 17% to $2.21 billion. Same-store sales rose 10.1% in the quarter as consumers resumed ordering their burritos and tacos at Chipotle restaurants. Wall Street was expecting same-store sales growth of 10.9%, in accordance with StreetAccount estimates.
Executives told analysts on the quarterly conference call that sales have slowed since May. However, one bright spot was that restaurants in college towns have observed their summer traffic go back to pre-pandemic levels. About 15% of Chipotle locations are near colleges, executives said.
Only 39% of transactions through the quarter originated from digital orders. The business said its loyalty program has a lot more than 29 million members.
Delivery orders fell slightly, which helped Chipotle’s margins. Even though many customers love the capability of delivery, third-party companies like Doordash charge Chipotle commission fees on every order, weighing on its profits.
Seeking to the 3rd quarter, Chipotle is projecting same-store sales growth in the mid- to high-single digits. The forecast includes next month’s planned price increases.
Through the second quarter, Chipotle’s board approved yet another $300 million to repurchase shares of the business.