People visit 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 may have scared away some inflation-weary customers.
“The low-income consumer definitely has pulled back their purchase frequency,” CEO Brian Niccol said on the company’s conference call. “Fortunately for Chipotle, you know, the majority of our customers are a higher household income consumer.”
The company also said it would raise prices again in August, indicating that costs keep rising for its restaurants.
Shares of Chipotle rose more than 8% in extended trading.
Here’s what the company reported compared with what Wall Street was expecting, based 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 income of $259.9 million, or $9.25 per share, up from $188 million, or $6.60 per share, a year earlier. The company said it faced higher costs for key ingredients like avocados, beef and dairy, which offset the benefit from price increases.
Excluding legal costs, restaurant closure expenses and 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%, according to 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 seen their seasonal traffic return to pre-pandemic levels. About 15% of Chipotle locations are near colleges, executives said.
Only 39% of transactions during the quarter came from digital orders. The company said its loyalty program has more than 29 million members.
Delivery orders fell slightly, which helped Chipotle’s margins. While many customers love the convenience of delivery, third-party companies like Doordash charge Chipotle commission fees on every order, weighing on its profits.
Looking to the third quarter, Chipotle is projecting same-store sales growth in the mid- to high-single digits. The forecast includes next month’s planned price increases.
During the second quarter, Chipotle’s board approved an additional $300 million to repurchase shares of the company.