Chipotle Mexican Grill Inc. reported Tuesday that Q3 earnings topped analysts' predictions with earnings per share coming in at $9.51 adjusted vs. $9.21 expected. Total revenue increased 13.7% to $2.2 billion, and comparable restaurant sales were up 7.6%. In-restaurant sales increased 22.1%, while digital sales represented 37.2% of food and beverage revenue

"Our performance in the third quarter confirms our brand and value proposition remain strong, even during a challenging economic environment, " CEO Brian Niccol said in a company press release. "With consumer discretionary spending tightening, we are focused on running great restaurants and delivering excellent customer and employee experiences."

For 2022, management is anticipating the following:

  • Fourth quarter comparable restaurant sales growth in the mid to high-single digits.
  • Between 235 to 250 restaurant openings, including 10 to 15 relocations to add a Chipotlane.
  • An estimated underlying effective full year tax rate between 25% and 27% before discrete items

The brand expects to open 255 to 285 to locations in 2023.

Although food costs are on the rise, Chipotle is offsetting them by raising menu prices. For example, a 4% increase in menu prices helped keep the chain in the black during last quarter and a second increase in August did the same for Q3.

Niccol, however, told investors the price increases did not undermine Chipotle's value as higher-income customers are still visiting the brand.

"We continue to see a widening of trends by income level with the lower income consumer further reducing frequency. Fortunately, for Chipotle, the majority of customers are from higher-income households, which continue to increase purchase frequency," he said during Tuesday's investor call. "While it is difficult to predict the macro impact on future spending trends, we know our value proposition remains strong and we experienced minimal resistance to our price increase in the quarter.

To put it into perspective, Niccol pointed out the average chicken burrito or bowl, which makes up about 50% of the chain's U.S. orders, is below $9.

"This is a tremendous value when you consider the quality of our food, including our food with integrity standards, the fresh preparation utilizing classic cooking techniques, the customization, generous portions and of course, the convenience and speed," he said during the call. "Our fresh preparation is particularly unique when comparing Chipotle to other restaurants. There are not many restaurant options that prepare their food fresh daily, and we do it in all 3,000-plus restaurants.

"So again, when you combine all these elements, you get an industry-leading brand with a tremendous value offering."

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