Chipotle Mexican Grill (CMG) earnings Q1 2023

Chipotle Mexican Grill (CMG) earnings Q1 2023

Pedestrians wearing protective masks walk in front of a Chipotle restaurant in San Francisco, California, April 19, 2021.

David Paul Morris | Bloomberg | Getty Images

Chipotle Mexican Grill on Tuesday reported quarterly earnings and revenue that topped analysts’ expectations, fueled by better than expected same-store sales growth.

Like McDonald’s, Chipotle said traffic to its restaurants grew during the first quarter despite higher menu items. Chipotle’s menu prices are up roughly 10% from a year earlier. CEO Brian Niccol said that the chain has demonstrated that it has pricing power.

“We don’t want to be in front of the inflationary environment, but we also don’t want to fall behind,” he said on the company’s conference call.

For now, Chipotle is pausing price increases, Niccol said on CNBC’s “Closing Bell.”

Shares of the company rose more than 7% in extended trading.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: $10.50 vs. $8.92 expected
  • Revenue: $2.37 billion vs. $2.34 billion expected

Chipotle reported first-quarter net income of $291.6 million, or $10.50 per share, up from $158.3 million, or $5.59 per share, a year earlier. The company’s menu price hikes and lower avocado prices helped improve profit margins compared with the year-ago period.

Net sales climbed 17.2% to $2.37 billion. Same-store sales rose 10.9%, topping StreetAccount estimates of 8.6%. 

Niccol said that higher-income consumers are returning to restaurants more frequently. Even lower-income diners are visiting more often than they were in the prior six months, although their traffic remains down from a year ago. Overall, traffic rose roughly 4% in the quarter, reversing last quarter’s decline.

In February, executives said that January’s same-store sales grew by double digits. A year earlier, the company saw sluggish sales as the omicron Covid outbreak put pressure on staffing and caused some temporary store closures.

Chipotle’s chicken al pastor is on track to be the chain’s most popular limited-time protein option ever, Niccol said on the company’s conference call. The company launched it in mid-March.

Digital orders accounted for nearly 40% of sales during the quarter. Chipotle customers have been ordering their burritos and tacos more in person compared with the year-ago period.

Executives also outlined changes coming to restaurants to improve speed of service and accuracy. The chain has been testing new grills that cook faster and more consistently. It’s also been experimenting with how to staff its two make lines to keep up with demand from both in-person diners and digital orders.

The company opened 41 new locations during the quarter, 34 of which included its drive-thru lanes reserved for digital order pickup.

Looking to the rest of the year, Chipotle is anticipating same-store sales growth in the mid-to-high single digits. It’s expecting the same range for its second-quarter same-store sales growth, roughly in line with StreetAccount estimates of 5.8%.

The company reiterated its plans to open between 255 to 285 new restaurants during 2023.

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