Chipotle Mexican Grill on Wednesday reported mixed quarterly results and said its restaurant-level operating margin shrank.
But the burrito chain saw traffic and same-store sales grow during the quarter as low-income consumers spent more, bucking industry trends, and CEO Scott Boatwright projected a strong finish to the year.
Shares of the company rose 7% in extended trading.
“Broader consumer and industry headwinds may continue, but initiatives across our recipe for growth strategy are building and giving us more tools to win in any environment,” Boatwright said on the company’s earnings conference call. “We are still in the early stages of this work, and it’s gaining traction.”
Like the broader restaurant industry, Chipotle saw trends soften in early October, although executives said its traffic has returned to growth since then. Boatwright said the company has “high confidence” in its performance for the rest of the fourth quarter.
“We feel very confident that November and December set up very well for us,” Boatwright said.
Chief Financial Officer Adam Rymer said that the company expects fourth-quarter same-store sales growth of about 2%.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
Earnings per share: 27 cents adjusted vs. 29 cents expectedRevenue: $3.29 billion vs. $3.29 billion expected
Chipotle reported fiscal third-quarter net income of $339.9 million, or 27 cents per share, down from $382.1 million, or 29 cents per share, a year earlier. The company’s restaurant-level operating margin fell from 24.5% to 23.3%.
Excluding restaurant asset impairment charges and stock-based compensation, the company earned 27 cents per share.
Net sales rose 9.6% to $3.29 billion, fueled by the chain’s new restaurants. During the quarter, Chipotle opened 84 company-owned restaurants and five international locations run by licensees.
In the second half of July, Chipotle said it started to see sales pull back as diners grew concerned about consuming raw lettuce due to cyclospora, although its own supply was never tied to an outbreak. Then in August, the chain disclosed that it had temporarily pulled jalapenos from Minnesota restaurants after learning its supply was potentially linked to a salmonella outbreak.
Still, the chain was able to report same-store sales growth for its third straight quarter, shaking off last year’s traffic woes.
Sales at stores open at least 13 months increased 2.1%, lifted by a 1.3% bump in average check.
For the first time this year, low-income consumers during the quarter outperformed the high-income cohort at its restaurants, Boatwright said. And discounts aren’t the reason — low-income consumers spent the most in September, when promotions were at their low point during the quarter, he told analysts.
For the full year, Chipotle reiterated its previous forecast that its same-store sales will increase by a low-single-digit percentage. Looking ahead to 2027, the company is projecting that it will open between 340 and 360 new company-owned locations in the U.S. and Canada and around 15 to 25 international restaurants.
