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Chipotle says price hikes lift revenue as customer visits slip

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Customers order from a Chipotle restaurant at the King of Prussia Mall in King of Prussia, Pennsylvania.
Mark Makela | Reuters

Chipotle Mexican Grill

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

Earnings per share: $9.51 adjusted vs. $9.21 expectedRevenue: $2.22 billion vs. $2.23 billion expected

The burrito chain reported third-quarter net income of $257.1 million, or $9.20 per share, up from $204.4 million, or $7.18 per share, a year earlier. The company reported paying more for dairy, tortillas, avocados, packaging and labor.

Excluding $3.5 million in separation costs tied to the departure of an employee, corporate restructuring and other items, Chipotle earned $9.51 per share.

Net sales rose 13.7% to $2.22 billion, fueled by same-store sales growth of 7.6% and new store openings. Analysts surveyed by StreetAccount were projecting a same-store sales increase of 7.3%.

Shares of Chipotle rose 4% in aftermarket trading.

Like other restaurant companies, Chipotle has been raising menu prices as it pays more for ingredients. Last quarter, the company said that lower-income consumers had been visiting less frequently, but that most of its customer base is in a higher-income bracket. Chipotle hiked prices for the third time in 15 months in August.

In-restaurant sales climbed 22.1% during the quarter. It’s a sign that customers are returning to Chipotle locations to order their burritos and tacos.

That trend has hurt digital sales, which accounted for just 37.2% of revenue. The percentage of online orders has been shrinking every quarter this year. But Chipotle’s profit has benefitted from the reduced number of delivery orders, for which the company pays third parties commission fees.

The restaurant company opened 43 new locations during the quarter. All but five included a “Chipotlane,” drive-thru lanes reserved for digital-order pickup.

For the fourth quarter, Chipotle is predicting same-store sales growth in the mid- to high-single digits. By the end of 2022, it’s forecasting it will open between 235 to 250 new restaurants. For 2023, the company is projecting 255 to 285 new location openings.

In the third quarter, Chipotle’s board approved an additional $200 million to buy back its shares.

This is breaking news. Check back for updates.

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