Chipotle Mexican Grill The company reported mixed quarterly results Wednesday, announcing that restaurant-level operating margins had contracted.
But the burrito chain saw foot traffic and same-store sales rise in the quarter as lower-income consumers bucked industry trends and increased spending, and CEO Scott Boatright expected the year to end on a strong note.
The company’s shares rose 7% in extended trading.
“While broad consumer and industry headwinds may persist, our efforts across the Recipe for Growth strategy are building and giving us more tools to win in any environment,” Boatwright said on the earnings call. “We are still in the early stages of this work and are gaining traction.”
Like the broader restaurant industry, Chipotle saw trends slow in early October, but executives said traffic has since returned to growth. Boatwright said the company has “high confidence” in its performance for the remainder of the fourth quarter.
“We’re very confident that November and December turned out to be very good for us,” Boatwright said.
Chief Financial Officer Adam Reimer said the company expects same-store sales to increase about 2% in the fourth quarter.
Here’s how the company reported for the year ended Sept. 30, based on a survey of analysts by LSEG, compared to Wall Street expectations.
Earnings per share: 27 cents adjusted vs. 29 cents expected Earnings: $3.29 billion vs. $3.29 billion expected
Chipotle reported fiscal third-quarter net income of $339.9 million, or 27 cents per share, down from $382.1 million, or 29 cents per share, in the year-ago period. The company’s restaurant-level operating margin declined from 24.5% to 23.3%.
Excluding restaurant asset impairment charges and stock-based compensation, the company earned 27 cents per share.
Net sales rose 9.6% to $3.29 billion, boosted by the chain’s new restaurants. During the quarter, Chipotle opened 84 company-owned restaurants and five international locations operated by licensees.
Chipotle said its supply had never been linked to the outbreak, but sales began to decline in late July as restaurants became increasingly concerned about consuming raw lettuce due to Cyclospora. And in August, the chain said it had temporarily removed jalapeños from its Minnesota restaurants after learning that its supply may be linked to a salmonella outbreak.
Still, the chain was able to report same-store sales growth for the third straight quarter, shaking off last year’s traffic problems.
Sales at stores open more than 13 months increased 2.1%, boosted by a 1.3% rise in average checks.
Boatwright said for the first time this year, lower-income consumers outperformed higher-income consumers at its restaurants in the quarter. And it’s not because of the discounts — low-income consumers spent the most in September, the weakest month for promotions in the quarter, he told analysts.
Chipotle reiterated its previous forecast for full-year same-store sales growth of a low-single-digit percentage.
The company expects to open 340 to 360 company-owned stores and approximately 15 to 25 international restaurants in the U.S. and Canada by 2027.
