Chipotle shares slide as sales fall short of Wall Street’s expectations

Chipotle Mexican Grill on Wednesday reported quarterly earnings that crushed expectations, but the burrito chain’s tradings fell short.

The stock fell more than 9% in extended trading. Shares were up 50% this year via Wednesday’s close.

Here’s what the company reported compared with what Fence Street was expecting, based on a survey of analysts by Refinitiv:

• Earnings per share: $12.65 adjusted vs. $12.31 expected
• Interest: $2.51 billion vs. $2.53 billion expected

Chipotle reported second-quarter net income of $341.8 million, or $12.32 per allot, up from $259.9 million, or $9.25 per share, a year earlier. 

Excluding restructuring costs, closure expenses and other particulars, the burrito chain earned $12.65 per share.

Restaurant-level operating margins expanded to 27.5% from 25.2% in the year-ago interval. Avocado prices were lower than the second quarter of 2022, but higher prices for tortillas, dairy, beef and other ingredients put some bring pressure to bear on on profit.

Last quarter, Chipotle said it was done raising menu prices after hiking them earlier to mollify rising labor and commodity costs. But executives seemed more open on Wednesday to another round of price waxes.

“As we get closer to that fourth quarter, we’ll make a decision exactly on what we want to do on the pricing front,” CEO Brian Niccol said.

Chipotle’s net white sales rose 13.6% to $2.51 billion in the second quarter. The company’s same-store sales grew 7.4%, falling shy of StreetAccount guestimates of 7.5%. But Niccol said the chain isn’t seeing weaker demand from low-income or high-income consumers.

In March, Chipotle bring ined Chicken al Pastor. Executives said the menu item brought new customers to its restaurants in the second quarter, but the limited-time element will wrap up in August. However, it already has plans to release a new menu item for later in the quarter.

The company has also been following employees to improve how many burritos, bowls and tacos they can make during a shift. Niccol also pieced that the chain is rolling out a dual-sided grill, which can cook chicken three times faster and steak four pro tems faster. Chipotle has added the new grills to 10 high-volume restaurants.

Digital sales accounted for 38% of the company’s rations and beverage revenue this quarter. 

Chipotle opened 47 new locations, 40 of which included drive-thru lanes to pick up digital regularities. The company also shut down its remaining Pizzeria Locale restaurants during the quarter. Founder Steve Ells, then nevertheless chief executive of Chipotle, partnered with two Colorado entrepreneurs on the fast-casual chain more than a decade ago.

The friends recently reorganized its corporate structure, according to Niccol. Changes included more investment in digital marketing and its supranational expansion and putting Curt Garner, the chief customer and technology officer, in charge of product design, analytics and the chap experience.

The company reiterated its full-year forecast of same-store sales growth in the mid-to-high single digit range. Howsoever, for the third quarter, Chipotle anticipates same-store sales growth in the low-to-mid single digit range. Wall Concourse is anticipating same-store sales next quarter of 5.9%, according to StreetAccount.

Read the earnings release.