Chipotle Mexican Grill, the made-to-order burrito chain that is the darling of the millennial generation, continues its sizzling financial performance.
In the quarter that ended Dec. 30, sales at Chipotle stores open at least one year expanded by 16.1 percent, raising overall revenue to $1.07 billion compared with $844.1 million in the same period a year earlier.
Earnings jumped 52.3 percent to $121.2 million, or $3.84 a share.
“Consumer trends are changing, which we believe is a great result of people becoming more discerning about where their food comes from, how it was raised, and how their meal was prepared,” Steve Ells, co-chief executive of Chipotle, said in a statement. “The continued loyalty we see from our customers, as well as third-party research, and the growing number of concepts imitating Chipotle, all point to the relevance of our vision and the impact we are having on food culture.”
Still, the results appeared to fall short of investors’ expectations, and the company’s shares were down about 5 percent in after-hours trading.
The chain’s profile has risen of late, because of the poor performance of McDonald’s, which recently let its chief executive go after a period of weak financial performance that some attribute to more competition from restaurants like Chipotle. McDonald’s owned a minority stake in Chipotle from 1998 to 2006, when it also divested itself of noncore holdings in Boston Market and Donatos Pizza.
Chipotle, together with chains like Boston Market and La Madeleine, have driven the growth of what the restaurant industry calls “fast casual,” a format selling foods prepared from high-quality ingredients in an assembly-line fashion to a customer’s specifications.
Such restaurants appeal in particular to consumers between the ages of 18 and 34, who prize customization, minimalism and intense flavors in what they eat.
Last year, Chipotle raised prices on its beef burritos 4 to 6 percent, passing the higher cost of the meat on to its consumers — who didn’t balk. That helped increase average check size and profit margins.
The company also added almost 200 new stores last year, a pace it plans to continue this year, which has helped spur overall revenue growth.
It has started two Chipotle-like businesses, ShopHouse Southeast Asian Kitchen and Pizzeria Locale, which so far has two restaurants. Investment analysts are watching these new concepts closely, to see if Chipotle can strike gold more than once.
Read the Full ArticleMembers help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.