Chipotle Mexican Grill Inc. shares took an 8% hit in the after-hours session on Wednesday. While the fast-casual restaurant chain exceeded Wall Street’s quarterly earnings expectations, it predicted a slightly weaker quarter due to inflation impacting some of its most popular menu items.
According to Chipotle, food, beverage, and packaging costs were actually lower in the second quarter compared to the same period last year. This was due to price increases implemented in 2022 and lower avocado prices.
However, these cost savings were partially offset by inflation affecting several food items, including beef, tortillas, dairy, salsa, beans, and rice, as stated by the company.
In terms of financials, Chipotle reported earnings of $341.8 million, or $12.32 per share, for the second quarter. This represents a significant increase from the $259.9 million, or $9.25 per share, recorded in the second quarter of 2022. Excluding one-time items, the fast-casual restaurant chain earned $12.65 per share.
Furthermore, the company announced a nearly 14% rise in revenue to $2.5 billion, with comparable-restaurant sales increasing by 7.4%.
Analysts surveyed by FactSet had anticipated Chipotle’s adjusted earnings to be $12.31 per share on sales of $2.53 billion. Same-store sales growth was expected to be around 7.5%.
Looking ahead to the third quarter, Chipotle projected that comparable-restaurant sales would grow in the low to mid-single-digit range. This falls slightly below the consensus estimate of approximately 6% growth.
For the full year, the company anticipates comparable-restaurant sales growth in the mid- to high-single-digit range.
While shares of Chipotle have already surged more than 50% this year, outperforming the S&P 500 index, which saw a 19% increase, the recent earnings release has caused a slight setback for the stock.
