Chipotle Mexican Grill reported quarterly sales in excess of pre-pandemic levels as customers returned to its restaurants for dinner on Tuesday.
The company also released a third quarter revenue forecast.
Shares rose 4% in extended trading.
Here’s what the company said, relative to Wall Street expectations, based on an analyst survey by Refinitiv:
- Earnings per share: $ 7.46 adjusted versus $ 6.52 expected
- Revenue: $ 1.89 billion versus an expected $ 1.88 billion
Chipotle reported net income of $ 188 million, or $ 6.60 per share, for the second quarter, compared to $ 8.2 million, or 29 cents per share, last year. Food and beverage costs were down almost 3% year over year due to menu price increases and lower beef prices.
With no disruption to restaurant facilities, shutdown costs, and other items, the burrito chain earned $ 7.46 per share, beating the $ 6.52 per share analysts surveyed by Refinitiv had expected.
Net sales rose 38.7 percent to $ 1.89 billion, beating expectations of $ 1.88 billion. Sales in the same store increased by 31.2%. A year ago, the company’s sales in the same store fell more than 9% after the lockdown hurt demand.
After online orders skyrocketed last year, Chipotle saw slow growth for this part of its business. Digital sales grew 10.5%, accounting for 48.5% of the company’s quarterly sales. In the first quarter, Chipotle’s online orders overtook in-person sales for the first time.
“I expect the percentage will likely drop a little when the dining rooms return,” said CEO Brian Niccol on Tuesday at CNBC’s Closing Bell. “What I’m watching are the absolute dollars we make in our digital business.”
The popularity of Chipotle’s all-digital quesadillas, which launched in March, helped boost online sales. Niccol said that every tenth transaction involves a quesadilla order.
Niccol said dining room sales are about 70% of 2019 levels while the company is holding about 80% of the gains in its digital orders. He also said customers are returning for lunch.
Chipotle opened 56 new locations and closed five restaurants in the quarter. Forty-five of the new restaurants have “chipotlanes,” as the company calls its drive-thru lanes, which are only intended for digital pickup of orders. Executives said restaurants with chipolanes see 20% higher sales when they open compared to locations without a drive-thru lane.
Looking to the third quarter, assuming current trends continue, the company forecasts low to mid double-digit sales growth in the same business. In the third quarter of 2020, sales in the same store rose 8.3%. Niccol said the Delta Covid variant has not yet affected consumer behavior.
CFO Jack Hartung told analysts that the company is forecasting higher food costs in the next quarter due to higher beef and freight prices, as well as staff shortages at its suppliers.
“In the next few quarters, we will have more transparency about how much of this inflation is permanent or temporary, and we can take the appropriate steps, if necessary, to offset the permanent impact,” he said.