Chipotle Mexican Grill Inc. (NYSE: CMG) reported fiscal first-quarter results on Thursday which showed profit jumping 22% thanks to higher customers traffic, offsetting rising food price inflation.
The Denver based burrito chain, said that sales at established stores or same-restaurant-sales, a key gauge on restaurant chain industry as it only includes sales results from those outlets opened at least 13-month period, rose 1% in the recently concluded quarter, which was in-line with Street’s estimation.
The Company said that the pace of growth in same-restaurant-sales so far this month was in-line with the performance in the fiscal first quarter, notwithstanding a slowdown in the U.S. economy.
Addressing analysts in earnings call, the Company’s Chief Financial Officer, Jack Hartung, said in a statement, “I’ve seen a lot of other companies say that it got tougher; then it got better. Frankly, January was a better month [for Chipotle Mexican Grill] than we expected. And it looks like it was better than other companies as well.”
“I don’t see anything that tells us that there’s been a change in trend, either up or down, from kind of the underlying 3% [sales trend growth] that we saw in the first quarter,” added Hartung.
During the first quarter, operating margins narrowed to 26.3% from 27.4% as costs related to food, especially salsa, dairy and chicken, rose sharply. Overall, food costs jumped 16% which accounted 33% of the revenue, said the Company.
However, Hartung pointed out that food prices are likely to stabilize in coming quarters, which will boost gross margin, adding that the chain is also considering increasing menu prices in the mid-term period (not until late summer or at the beginning of fall).
For the full fiscal year, the Chain maintained its guidance on the same-restaurant-sales growth which is flat to lower single digit percentage, not assuming any changes in prices.
For the quarter, Chipotle reported net income of $76.6 million or $2.45 a share, compared to a profit of $62.7 million or $1.97 a share, in the year earlier quarter. Revenue during the quarter climbed 13% to $726.8 million.
Analysts’ consensus estimate was for earnings of $2.13 a share on sales of $725 million.
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