Chipotle teases new menu item after chicken al pastor says goodbye in late August
Chipotle Mexican Grill Inc. shares nearly 9% in the after-hours session Wednesday after the fast-casual restaurant chain beat Wall Street expectations for its quarterly profit but called for a slightly weaker current quarter and said that inflation hit some of its most popular menu items.
Food, beverage and packaging costs were lower in the second quarter than a year ago, benefiting from price increases the company took last year and from lower avocado prices, Chipotle said.
Those were offset in part by “by inflation across several food costs, primarily beef, tortillas, dairy, salsa, beans and rice,” the company said.
In a call with analysts after the results, Chief Executive Brian Niccol said the company plans to focus on growth in the number of transactions. Chipotle executives also teased a new menu item after its chicken al pastor special item ends its run in late August.
Chicken al pastor helped Chipotle navigate inflation because it shifted people away from more expensive, higher food-cost steak, so the company experienced a “low-grade inflation,” Niccol said in the call.
Asked by an analyst if chicken al pastor could become a “permanent” menu item, Niccol said Chipotle “definitely will go back and evaluate,” as the food “struck a chord with a lot of people, and I can understand why.”
The challenge for the company that if it wants to add something permanently on its menu it has to remove another item, so it has to be sure it understands potential trade-offs, he said.
For the third quarter, “we do think there’s going to be a bump up in food cost,” attributable to that same kind of low-grade inflation that the company expects to continue into the current quarter but without the offset from cheaper avocados and the al pastor item, he said.
Chipotle CMG, -0.21% earned $341.8 million, or $12.32 a share, in the second quarter, compared with $259.9 million, or $9.25 a share, in the second quarter of 2022.
Excluding one-time items, the fast-casual restaurant chain earned $12.65 a share.
Revenue rose nearly 14% to $2.51 billion, the company said, with comparable-restaurant sales up 7.4%.
Analysts polled by FactSet had expected Chipotle to report adjusted earnings of $12.31 a share on sales of $2.53 billion. Same-store sales were seen up 7.5%.
Chipotle guided for third-quarter comparable-restaurant sales growth in the low to mid-single-digit range, compared with consensus growth of around 6%.
For the full year, the company called for comparable-restaurant sales growth in the mid- to high-single-digit range.
Shares of Chipotle have gained more than 50% so far this year, compared with an advance of around 19% for the S&P 500 index SPX, -0.02%.