Stock Market News

Chipotle’s wealthier customers bought pricier burritos, boosted profits

2022.07.27 02:34

Chipotle's wealthier customers bought pricier burritos, boosted profits
FILE PHOTO: A signage is seen in a Chipotle outlet in Manhattan, New York City, U.S., February 7, 2022. REUTERS/Andrew Kelly

By Deborah Mary Sophia and Hilary Russ

(Reuters) -Chipotle Mexican Grill Inc on Tuesday beat Wall Street estimates for quarterly profits, as multiple rounds of price hikes helped the burrito chain cushion the blow from soaring costs.

Shares of the California-based company jumped more than 8% in extended trading as it also said restaurant margins improved to 25.2% in the second quarter from 24.5% a year earlier.

With higher costs biting into profits in the restaurant industry, Chipotle (NYSE:CMG), like peers McDonald’s Corp (NYSE:MCD) and Starbucks Corp (NASDAQ:SBUX), has hiked prices several times over the past few months.

“Our pricing power is strong and the brand is resilient,” Chief Executive Officer Brian Niccol said during a call with investors.

Low-income customers are not ordering as often, Niccol said, citing data from the chain’s rewards program. But the majority of Chipotle’s customers are higher income consumers who actually increased their frequency, he said.

Earlier, Walmart (NYSE:WMT) Inc and McDonald’s warned that low-income consumers had stopped splurging on more expensive items.

Chipotle has been launching new menu items such as the limited-time Mexican chicken dish pollo asado in a bid to boost demand. The company has also been doubling down on its digital business through its order-ahead drive-thru “Chipotlanes”.

While Chipotle’s menu prices rose over 4% in the quarter, that was outpaced by higher costs for avocados, tortillas, dairy and beef.

To shave costs, the company has been looking to automate its kitchen operations and is even testing a robot called “Chippy” to help cook tortilla chips.

The price hikes helped Chipotle’s net income jump to $259.9 million, or $9.25 per share, in the second quarter ended June 30, from $188 million, or $6.60 per share, a year earlier.

Excluding items, Chipotle earned $9.30 per share, topping estimates of $9.04, according to Refinitiv IBES.

It expects same-store sales to rise in the mid- to high-single digits in the third quarter, while analysts on average predict a 7.1% gain.

Source

Related Articles

Leave a Reply

Back to top button
bitcoin
Bitcoin (BTC) $ 75,960.35 1.57%
vested-xor
Vested XOR (VXOR) $ 3,405.08 99,999.99%
ethereum
Ethereum (ETH) $ 2,919.15 3.31%
tether
Tether (USDT) $ 1.00 0.01%
solana
Solana (SOL) $ 199.59 6.21%
bnb
BNB (BNB) $ 598.77 0.14%
usd-coin
USDC (USDC) $ 0.999999 0.02%
xrp
XRP (XRP) $ 0.549957 1.54%
dogecoin
Dogecoin (DOGE) $ 0.197862 3.03%
staked-ether
Lido Staked Ether (STETH) $ 2,916.94 3.32%
cardano
Cardano (ADA) $ 0.437195 17.63%
tron
TRON (TRX) $ 0.160594 0.78%
wrapped-steth
Wrapped stETH (WSTETH) $ 3,451.04 2.95%
the-open-network
Toncoin (TON) $ 4.88 0.50%
shiba-inu
Shiba Inu (SHIB) $ 0.000019 2.18%
avalanche-2
Avalanche (AVAX) $ 27.48 1.24%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 75,834.32 1.41%
weth
WETH (WETH) $ 2,918.53 3.38%
chainlink
Chainlink (LINK) $ 12.81 3.33%
bitcoin-cash
Bitcoin Cash (BCH) $ 378.79 0.93%
sui
Sui (SUI) $ 2.31 2.53%
polkadot
Polkadot (DOT) $ 4.21 2.03%
leo-token
LEO Token (LEO) $ 6.33 3.40%
usds
USDS (USDS) $ 0.998978 0.61%
wrapped-eeth
Wrapped eETH (WEETH) $ 3,068.89 3.28%
litecoin
Litecoin (LTC) $ 71.40 0.78%
uniswap
Uniswap (UNI) $ 8.86 1.06%
near
NEAR Protocol (NEAR) $ 4.22 0.81%
aptos
Aptos (APT) $ 9.72 1.12%
pepe
Pepe (PEPE) $ 0.000011 5.62%
bittensor
Bittensor (TAO) $ 507.08 3.16%
fetch-ai
Artificial Superintelligence Alliance (FET) $ 1.42 2.20%
internet-computer
Internet Computer (ICP) $ 7.72 2.33%
dai
Dai (DAI) $ 0.999816 0.06%
monero
Monero (XMR) $ 164.46 1.37%
crypto-com-chain
Cronos (CRO) $ 0.110846 28.89%
stellar
Stellar (XLM) $ 0.101472 3.74%
ethereum-classic
Ethereum Classic (ETC) $ 20.19 0.02%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.17%
kaspa
Kaspa (KAS) $ 0.113617 4.58%
whitebit
WhiteBIT Coin (WBT) $ 19.63 2.06%
aave
Aave (AAVE) $ 181.17 1.09%
polygon-ecosystem-token
POL (ex-MATIC) (POL) $ 0.343452 1.00%
blockstack
Stacks (STX) $ 1.66 1.68%
okb
OKB (OKB) $ 40.24 1.22%
first-digital-usd
First Digital USD (FDUSD) $ 0.999417 0.11%
dogwifcoin
dogwifhat (WIF) $ 2.33 0.77%
arbitrum
Arbitrum (ARB) $ 0.573594 0.62%
mantle
Mantle (MNT) $ 0.66289 7.64%
filecoin
Filecoin (FIL) $ 3.73 0.49%