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Chipotle Sinks After Sales Fall Short of Investor Estimates

Chipotle Sinks After Sales Fall Short of Investor Estimates

Sales Miss Weights on Lower Digital Sales, Higher Costs

Chipotle Mexican Grill Inc. shares plunged after the burrito chain reported quarterly sales that missed analysts’ estimates, weighed down by lower digital sales and increasing costs.

Revenue rose 11% to $2.21 billion in the three months ended Sept. 30, the company said Tuesday in a statement. Analysts, on average, estimated $2.23 billion, according to data compiled by Bloomberg.

Digital sales declined 15.1% in the quarter, reflecting a tough comparison with the pandemic-driven surge a year earlier. Chipotle also cited higher costs for ingredients, such as avocados and beef.

Outlook Cut, Shares Slump

The company trimmed its outlook for the year, saying it now expects comparable sales to rise in the mid-single digits, compared with a previous forecast of mid- to high-single digits.

Shares of Chipotle fell as much as 6.4% to $1,559.24 in premarket trading in New York. The stock had gained 17% this year through Monday’s close.

Inflation Pressures Impact Margins

Chipotle, like other restaurant chains, has been grappling with rising inflation, which has pushed up its costs for ingredients, labor and transportation.

The company said its restaurant-level operating margin was 16.4% in the quarter, down from 18.6% a year earlier. Chipotle raised prices on its menu earlier this year to help offset some of the cost pressures.

Digital Sales Remain Key

Despite the recent decline in digital sales, Chipotle said it remains committed to growing its digital business, which includes online ordering and delivery.

The company said it is investing in new technology and expanding its delivery reach to drive digital sales growth.

Continued Expansion Plans

Chipotle also said it plans to continue expanding its restaurant footprint, with plans to open 235 to 250 new locations this year.

The company said it is seeing strong demand for new restaurants, particularly in underserved markets.