Home Finance Chipotle sees quarterly sales above Wall Street view amid strong demand

Chipotle sees quarterly sales above Wall Street view amid strong demand

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The emblem of Chipotle is seen on one in every of their eating places in Manhattan, New York Metropolis, U.S., February 7, 2022. REUTERS/Andrew Kelly/File Picture

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April 26 (Reuters) – Chipotle Mexican Grill Inc (CMG.N) forecast second-quarter same-store gross sales above analysts’ estimates on Tuesday, betting demand for its burritos and rice bowls will stay buoyant regardless of just a few rounds of value will increase.

The burrito chain forecast comparable restaurant gross sales development of 10% to 12% for the present quarter, in contrast with estimates of 8.8% development, in keeping with IBES knowledge from Refinitiv.

The corporate’s shares rose almost 5% in prolonged buying and selling.

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Chipotle, like rivals McDonald’s Corp (MCD.N) and Starbucks Corp (SBUX.O), has raised costs of its in-store and supply menus in a bid to counter increased costs for all the pieces from worker wages to beef, avocados and paper.

Meals, beverage and packaging prices within the first quarter had been 31% of whole income, a rise of 100 foundation factors from a yr earlier.

In late March, Chipotle hiked the value of a carnitas bowl at one New York Metropolis location by 5% to $11.55, a Reuters monitor of costs confirmed, although elevating menu costs is “actually the very last thing we need to do,” CEO Brian Niccol stated in an interview.

Chipotle’s core prospects – which analysts say are among the many most prosperous and youngest – haven’t pushed again towards dearer meals, Niccol stated.

Regardless of elevated costs for patrons, increased meals prices additionally squeezed restaurant margins, which dropped 160 foundation factors to twenty.7%. Margins ought to rebound to 25% within the second quarter if inflation stabilizes, he stated.

Automating kitchen duties may finally assist offset increased labor prices. The corporate is getting ready to check Chippy, a robotic arm that fries tortilla chips, in a single California location.

Chipotle can also be exploring robots to take away duties staff say they do not like – chopping onions and jalapenos and coring avocados – though staff take pleasure in mashing the guacamole, Niccol stated.

Comparable gross sales rose 9% within the first quarter ended March 31, whereas analysts polled by Refinitiv anticipated 7.9% development.

On an adjusted foundation, Chipotle earned $5.70 per share within the first quarter, beating estimates of $5.64.

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Reporting by Praveen Paramasivam in Bengaluru and Hilary Russ in New York; Modifying by Sriraj Kalluvila, Bernard Orr and Richard Pullin

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