Chipotle Mexican Grill (CMG) Q3 2021 earnings beat

Chipotle Mexican Grill on Thursday reported quarterly earnings that crushed Wall Avenue’s estimates as its menu value will increase helped the chain climate increased prices.

Shares of the corporate rose greater than 1% in prolonged buying and selling.

This is what the corporate reported in contrast with what Wall Avenue was anticipating, primarily based on a survey of analysts by Refinitiv:

• Earnings per share: $7.02 adjusted vs. $6.32 anticipated
• Income: $1.95 billion vs. $1.94 billion anticipated

The corporate reported fiscal third-quarter web revenue of $204.4 million, or $7.18 per share, up from $80.2 million, or $2.82 per share a 12 months earlier.

Beef and freight prices had been increased, however menu value hikes offset the influence of these elevated bills. In June, the chain introduced that menu costs would rise by roughly 4% to cowl the price of mountain climbing restuarant employees’ wages to a median of $15 an hour.

Excluding a tax profit, restructing prices and different objects, Chipotle earned $7.02 per share, topping the $6.32 per share anticipated by analysts surveyed by Refinitiv.

Web gross sales rose 21.9% to $1.95 billion, beating expectations of $1.94 billion. Similar-store gross sales climbed 15.1%, topping StreetAccount estimates of 14%.

Digital gross sales elevated by 8.6% after greater than tripling a 12 months in the past. The corporate’s loyalty program has gained 24.5 million members in two and a half years, serving to Chipotle be taught extra about its clients and encourage extra frequent visits.

“There isn’t a doubt that the loyalty program has moved from the crawl to the stroll stage, and we nonetheless have lots of room to develop,” CEO Brian Niccol mentioned on the convention name.

Chipotle remains to be experiencing some staffing challenges amid the labor crunch that is hitting the broader trade. However Chief Know-how Officer Curt Garner mentioned in an interview that Chipotle was capable of hold that from hitting its gross sales for essentially the most half by preserving its eating places open. When a location is understaffed for a shift, it may flip off its digital orders to give attention to in-restaurant transactions. Supply orders will likely be fulfilled by a close-by restaurant, whereas digital clients trying to decide up their orders will likely be directed to order from a close-by location as a substitute.

On the tail finish of the quarter, the chain launched smoked brisket as a limited-time menu choice. Robust demand for the merchandise implies that its availability will finish in November, barely sooner than initially deliberate. Below Niccol, who beforehand led Yum Manufacturers’ Taco Bell, the corporate has accelerated including new menu objects via a course of it calls stage-gate testing. The chain has been strategic with new releases, making lots of them limited-time choices to drive buyer site visitors to its eating places and to maintain the menu from changing into bloated.

The corporate opened 41 new eating places throughout the quarter. Solely 5 of these places didn’t embody a “Chipotlane,” a drive-thru lane designated for selecting up digital orders. Executives mentioned that the corporate remains to be coping with inflation on development supplies, shortages on subcontractor labor and gear and landlord supply delays.

Looking forward to the fourth quarter, the corporate is projecting same-store gross sales development within the low-to-mid double-digits vary. Chipotle did be aware a number of uncertainties weighing on the enterprise, like inflation, staffing pressures and Covid-19.

“Regardless of these challenges we stay assured in our capability to drive restaurant margins increased as our common unit volumes enhance,” CFO Jack Hartung mentioned.

Chipotle additionally introduced its board had permitted an extra $100 million in inventory buybacks, bringing its complete authorization to $209.8 million as of Sept. 30. The corporate repurchased $98.7 million in inventory throughout the third quarter.

Learn the complete earnings launch right here.