Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Chipotle's wealthier customers bought pricier burritos, boosted profits

Stock Markets Jul 26, 2022 05:56PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A signage is seen in a Chipotle outlet in Manhattan, New York City, U.S., February 7, 2022. REUTERS/Andrew Kelly
 
MCD
+1.34%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
SBUX
+3.38%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CMG
+2.09%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Deborah Mary Sophia and Hilary Russ

(Reuters) -Chipotle Mexican Grill Inc on Tuesday beat Wall Street estimates for quarterly profits, as multiple rounds of price hikes helped the burrito chain cushion the blow from soaring costs.

Shares of the California-based company jumped more than 8% in extended trading as it also said restaurant margins improved to 25.2% in the second quarter from 24.5% a year earlier.

With higher costs biting into profits in the restaurant industry, Chipotle (NYSE:CMG), like peers McDonald's Corp (NYSE:MCD) and Starbucks Corp (NASDAQ:SBUX), has hiked prices several times over the past few months.

"Our pricing power is strong and the brand is resilient," Chief Executive Officer Brian Niccol said during a call with investors.

Low-income customers are not ordering as often, Niccol said, citing data from the chain's rewards program. But the majority of Chipotle's customers are higher income consumers who actually increased their frequency, he said.

Earlier, Walmart (NYSE:WMT) Inc and McDonald's warned that low-income consumers had stopped splurging on more expensive items.

Chipotle has been launching new menu items such as the limited-time Mexican chicken dish pollo asado in a bid to boost demand. The company has also been doubling down on its digital business through its order-ahead drive-thru "Chipotlanes".

While Chipotle's menu prices rose over 4% in the quarter, that was outpaced by higher costs for avocados, tortillas, dairy and beef.

To shave costs, the company has been looking to automate its kitchen operations and is even testing a robot called "Chippy" to help cook tortilla chips.

The price hikes helped Chipotle's net income jump to $259.9 million, or $9.25 per share, in the second quarter ended June 30, from $188 million, or $6.60 per share, a year earlier.

Excluding items, Chipotle earned $9.30 per share, topping estimates of $9.04, according to Refinitiv IBES.

It expects same-store sales to rise in the mid- to high-single digits in the third quarter, while analysts on average predict a 7.1% gain.

Chipotle's wealthier customers bought pricier burritos, boosted profits
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Dennis Chuck
Dennis Chuck Jul 27, 2022 12:24AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
“Fortunately for Chipotle, you know, the majority of our customers are a higher household income consumer,” CEO Brian Niccol said. So poor people please dont come, dont need your spending if you cant afford.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email