A Chipotle restaurant and signage is seen on February 09, 2022 in Miami, Florida.
Joe Raedle | Getty Images
Chipotle Mexican Grill on Tuesday reported weaker-than-expected quarterly earnings and revenue, signaling that its price hikes may finally be alienating customers.
In October, CEO Brian Niccol said the company saw “minimal resistance” to higher prices for its burrito bowls and tacos, although transactions during the third-quarter declined 1%.
Chipotle shares fell more than 5% in extended trading.
Here’s what the company reported for the fourth quarter, compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $8.29 adjusted vs. $8.90 expected
- Revenue: $2.18 billion vs. $2.23 billion expected
It’s the first time since Chipotle’s third-quarter report in 2017 that the company has fallen short of Wall Street’s estimates for both its quarterly earnings and revenue, according to Refinitiv data.
The burrito chain reported fourth-quarter net income of $223.7 million, or $8.02 per share, up from $133.5 million, or $4.69 per share, a year earlier. Higher menu prices helped offset rising food costs as the company paid more for dairy and tortillas during the period, ended Dec. 31.
Excluding certain legal expenses, corporate restructuring costs and other items, Chipotle earned $8.29 per share.
Net sales climbed 11.2% to $2.18 billion for the fourth quarter. The company’s same-store sales rose just 5.6%, falling short of StreetAccount estimates of 6.9% and coming in weaker than Chipotle’s own forecast from late October.
The company said it’s projecting same-store sales growth in the high-single digits for the first quarter of 2023, based on January same-store sales growth in the low double-digits. Wall Street was anticipating first-quarter same-store sales of 6.7%, according to StreetAccount estimates.
A year ago, the company was reeling from a wave of Covid infections that caused some locations to shorten hours or temporarily close due to sick employees.
Last month, Chipotle said it is looking to hire 15,000 workers by this spring, ahead of its busiest time of the year.
The company plans to open between 255 and 285 new locations this year, including relocating 10 to 15 restaurants to add a drive-thru lane.
Read the full Chipotle earnings report here.