Chipotle Mexican Grill reported mixed quarterly results on Wednesday, with adjusted earnings falling short of expectations despite stronger customer traffic and growth in same-store sales. Shares rose 7% in extended trading as the burrito chain forecast a solid finish to the year.
The company’s restaurant-level operating margin narrowed to 23.3% from 24.5% a year earlier, while adjusted earnings per share came in at 27 cents, below the 29 cents analysts had expected. Revenue matched forecasts at $3.29 billion.
Chief executive Scott Boatwright said Chipotle had seen sales trends soften in early October, in line with the wider restaurant industry, but added that traffic had since returned to growth.
“We feel very confident that November and December set up very well for us,” Mr Boatwright told analysts. Chief financial officer Adam Rymer said the company expected fourth-quarter same-store sales growth of about 2%.
Net income for the third quarter fell to $339.9 million, or 27 cents per share, from $382.1 million, or 29 cents per share, in the same period last year. Excluding restaurant asset impairment charges and stock-based compensation, earnings were 27 cents per share.
Revenue increased by 9.6%, helped by new openings. Chipotle added 84 company-owned restaurants during the quarter, alongside five international locations operated by licensees.
Sales at restaurants open for at least 13 months rose 2.1%, with the average customer bill increasing by 1.3%. It was the chain’s third consecutive quarter of same-store sales growth, following traffic problems last year.
Chipotle said lower-income customers outspent higher-income customers during the quarter for the first time this year. Mr Boatwright said the improvement was not driven by discounts, noting that lower-income spending was strongest in September, when promotions were at their lowest level during the period.
The chain experienced a sales pullback in the second half of July as concerns grew about eating raw lettuce because of cyclospora, although Chipotle said its own supply had not been linked to an outbreak. In August, it temporarily removed jalapenos from restaurants in Minnesota after learning that its supply might be linked to a salmonella outbreak.
“Broader consumer and industry headwinds may continue, but initiatives across our recipe for growth strategy are building and giving us more tools to win in any environment,” Mr Boatwright said. “We are still in the early stages of this work, and it’s gaining traction.”
Chipotle maintained its full-year forecast for same-store sales to rise by a low-single-digit percentage. For 2027, it expects to open between 340 and 360 company-owned restaurants in the US and Canada, as well as about 15 to 25 international locations.
