World Stock Watch

Chipotle Mexican Grill Reports Mixed Quarterly Results

Despite another quarter of higher traffic to its restaurants, Chipotle Mexican Grill reported mixed quarterly results on Tuesday, causing shares to fall 3% in extended trading.

Key Highlights:

• Third-quarter net income rose to $378.4 million, or 28 cents per share, up from $313.2 million, or 23 cents per share, a year earlier.
• Food and beverage costs increased due to the company’s decision to reemphasize generous portions after social media backlash over burrito bowl sizes.
• Net sales climbed 13% to $2.79 billion, with same-store sales rising 6%, just shy of estimates.
• Traffic to restaurants increased 3.3%, bucking an overall slump in foot traffic across the industry.

Growth Across All Income Cohorts

Interim CEO Scott Boatwright attributed the growth to a wealthier customer base willing to pay more for Chipotle’s burritos and bowls. “We’re seeing growth from all income cohorts at present,” he said. Demand was weaker at the start of the third quarter but accelerated throughout the period, particularly with the reintroduction of smoked brisket.

Digital Sales and Expansion

Digital sales accounted for 34% of the chain’s quarterly food and beverage revenue. The company opened 86 new locations during the quarter, with 73 including a “Chipotlane” dedicated to online order pickup. Chipotle is also investing in new equipment to improve preparation and cooking.

Outlook and Expansion Plans

For the full year, Chipotle reiterated its outlook that same-store sales will grow by a mid- to high-single-digit percentage. The company plans to open between 285 and 315 new restaurants this year and between 315 and 345 new locations in 2025, with more than 80% including a Chipotlane.

Leadership and Strategy

Boatwright reassured investors that the chain’s strategy is not changing despite the leadership shake-up following former CEO Brian Niccol’s departure. “I have worked alongside our talented executive team to craft and evolve our successful strategy, and we will continue to execute against it,” he said.