Updated version 2 - Chipotle’s quarterly sales exceed expectations, continuing to attract diners

Charts supplemented, CEO comments added in paragraph 5, analyst comments added in paragraph 7, more details added in paragraphs 12-13, and share price updated.

Reuters, October 28 - Chipotle Mexican Grill (CMG.N) reported better-than-expected comparable sales on Wednesday, as promotions, marketing initiatives, and limited-time offers helped the burrito chain attract more customers.

The company's stock price rose about 4% in after-hours trading.

The company also benefited from demand among health-conscious and younger customers, who favor high-protein, minimally processed meals like its burrito bowls and salads, as well as new items such as the limited-time “Chipotle Honey Chicken”.

This has allowed the chain to remain resilient, even as consumers tighten spending in the context of geopolitical and macroeconomic uncertainty; and, after outbreaks of cyclosporiasis (link) in multiple states undermined consumer confidence (link), making people more cautious about dining out.

“Broader consumer and industry headwinds may persist, but the initiatives in our ‘growth strategy’ are being implemented step by step, providing us with more tools to succeed in any environment,” CEO Scott Boatwright said during the earnings call.

According to data compiled by London Stock Exchange Group (LSEG), Chipotle’s same-store sales in the third quarter rose 2.1%, topping analysts’ average expectation of 1.4% growth.

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“Chipotle regained growth momentum in the third quarter, reflecting the company’s success attracting young customers through promotions and loyalty rewards,” said eMarketer analyst Rachel Wolff.

Quarterly revenue grew 9.6% to $3.29 billion, in line with market expectations.

However, increases in labor, transportation, and beef and other raw material costs put pressure on its quarterly profit.

The company reported adjusted earnings per share of $0.27, while analysts on average expected $0.29.

Chipotle also reaffirmed its annual forecast of low single-digit same-store sales growth.

Earlier this month, Starbucks announced it would not acquire Chipotle (link), after reports suggested the potential deal could have seen coffee chain CEO Brian Niccol return to lead the burrito chain he headed for six years.

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