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Chipotle earnings beat Wall Street estimates

Nearly a fifth of Chipotle's sales during its fourth quarter came from digital orders. Read more...

Chipotle Mexican Grill on Tuesday reported quarterly earnings that topped analysts’ expectations as its limited-time carne asada drove customers to its restaurants.

Shares of the company rose 1% in extended trading. Ahead of its earnings release, the stock hit an all-time high of $890.17 during morning trading Tuesday.

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

  • Earnings per share: $2.86, adjusted, vs. $2.75 expected
  • Revenue: $1.4 billion vs. $1.4 billion expected
  • Same-store sales: 13.4% vs. 9.5% expected

The burrito chain reported fiscal fourth-quarter net income of $72.4 million, or $2.55 per share, up from $32 million, or $1.15 per share, a year earlier.

Excluding corporate restructuring expenses, restaurant closure costs and other items, Chipotle earned $2.86 per share, topping the $2.75 per share expected by analysts surveyed by Refinitiv.

Net sales rose 17.6% to $1.4 billion, meeting expectations. The burrito chain’s digital sales, including those from delivery, grew by 78.3% in the quarter. Digital orders accounted for nearly a fifth of the company’s sales during the fourth quarter and exceeded a billion dollars for fiscal 2019. 

As digital orders become an increasingly significant part of Chipotle’s business, the company is testing a new design for its restaurants to maximize that growth.

The restaurant chain reported same-store sales growth of 13.4%, fueled by more customers returning to its restaurants. Customers were also spending more, driving a 5.4% in the average check.

Chipotle’s fourth-quarter sales got a boost from carne asada, which it offered as a pricier protein option for a limited time. The chain expects to run out of supply of carne asada by the end of the first quarter. CEO Brian Niccol said Tuesday that the company is looking into adding it to the menu permanently, if it can find a supply that fits its high quality standards.

The restaurant company is eyeing more new menu items, like its queso blanco. Niccol said that the replacement for its current queso will be rolling out nationwide in the near future.

In 2020, Chipotle expects to add between 150 to 165 new restaurants, about half of which will include a drive-thru lane for only digital orders. By the end of 2019, the company had 66 “Chipotlanes” nationwide.

The company is also forecasting same-store sales growth in the mid-single digits for the full-year 2020.

Chipotle also said that it estimates that it may be asked to pay $25 million to settle the U.S. Attorney’s investigation into the company that began four years ago related to foodborne illness outbreaks that occurred at its restaurants.

“While there can be no assurance that a settlement will be reached, we have been cooperating with the investigation and are in discussions to resolve this matter,” the company said in the earnings release.

Read the full earnings release here.

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