Chipotle’s Sales Accelerate, But Wall Street’s Hungry for More
(Bloomberg) -- Chipotle Mexican Grill Inc. posted same-store sales acceleration for a fifth consecutive quarter -- but higher costs related to wages, delivery and advertising represent a challenge for the burrito chain.
- The Mexican restaurant chain reported comparable sales growth of 9.9 percent last quarter, beating the estimate for a 7.3 percent increase from Consensus Metrix.
Key Insights
- Investors have cheered Chief Executive Officer Brian Niccol's efforts to revamp the burrito chain, but his honeymoon may be coming to an end -- especially since the stock has already doubled in value over the last 12 months.
- In addition to cleaning up the basics with better advertising and operations, Niccol is rushing to improve digital, expand delivery and offer more trendy items like Keto-diet friendly bowls. Digital sales doubled in the quarter, accounting for almost 16 percent of revenue.
- Chipotle is facing higher labor costs as minimum-wage increases take hold across the U.S. The company is especially sensitive to pay hikes because it owns its restaurants and doesn't franchise.
- The company is spending more on marketing this year to boost its brand image and encourage more digital orders. In March, Chipotle took its new loyalty program national.
Market Reaction
- The shares alternated between losses and gains in late trading in New York, and were little changed as of 4:30 p.m. They have gained 64 percent this year through Wednesday's close.
Get More
- Click here for financial details.
- Click here for company statement.
To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net
To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Jonathan Roeder
©2019 Bloomberg L.P.
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