Why Chipotle Mexican
Grill Stock Caught Fire
• Shares of Chipotle Mexican Grill were rolling
higher once again today, gaining as much as
13% after the burrito chain delivered another
blowout earnings report last night.
• Comparable sales jumped by a whopping
17.3%. While a price increase helped boost
that figure, the vast majority of the growth
came from an uptick in customer traffic as
higher prices only boosted sales by 2.5%.
• The restaurant chain also cruised past analyst
estimates. Revenue jumped 28.6% to $1.05
billion and earnings per share came in at
$3.50. Analysts had expected sales of $990
million and EPS of just $3.08.
• The strong quarter was especially impressive
considering many retailers have complained of
poor traffic recently and the jump in
transactions came in spite of a price hike,
demonstrating pricing power.
• As a result of the strong performance,
management lifted its same-store sales
guidance for the full year from high-single
digits all the way to the mid-teens.
• Unit economics should
also be stronger in the
back half of the year as the
full price increase was not
in effect until the current
quarter. The company
raised prices in part to
combat rising food costs. Source: Chipotle.
• Customer transactions are soaring
and margins should improve as
prices go up. The company now has
more than 1,600 restaurants
including 17 abroad as well as seven
ShopHouse locations with many
more to come. After a flawless
quarter, it seems like more good
things are ahead for Chipotle.
Your credit card may soon
be completely worthless