Chipotle Profit Rises 30% as More Diners Visit Restaurant
Chipotle Mexican Grill Inc. (CMG), the biggest gainer among restaurants in the Standard & Poor’s 500 Index last year, said fourth-quarter profit rose 30 percent as more customers visited its stores.
Net income advanced to $79.6 million, or $2.53 a share, from $61.4 million, or $1.95, a year earlier, the Denver-based company said in a statement. The average of 27 analysts’ estimates compiled by Bloomberg was $2.52. Sales rose 21 percent to $844.1 million, topping the $826.3 million average projection.
Founder and Co-Chief Executive Officer Steve Ells has been expanding beyond the company’s core burrito business with new restaurant concepts and catering services to attract more customers. The company also has been doing more traditional marketing with billboards and print ads about how its food is made. Sales at Chipotle stores open at least 13 months rose 9.3 percent in the quarter. Analysts estimated a 6.7 percent gain, the average of 25 projections from Consensus Metrix.
“It’s really marketing and advertising that’s driving traffic for them,” Peter Saleh, a New York-based analyst at Telsey Advisory Group, said in an interview. “This is really impressive in light of what we’ve heard from other retailers, including Starbucks, who said December was a weak month.”
Chipotle rose 12 percent to $551.96 at the close in New York for the biggest gain since Oct. 18. The shares jumped 79 percent last year, while the Standard & Poor’s 500 Restaurants Index increased 23 percent.
Chipotle said comparable-store sales will increase at a “low- to mid-single digit” percentage rate this year. Same-store sales are considered an indicator of a retailer’s performance because they include only older, established locations.
Because of higher costs for ingredients such as avocados and beef, a menu price increase is “likely” in the third quarter, Chief Financial Officer Jack Hartung said on a conference call yesterday.
The company also is expanding its ShopHouse Southeast Asian Kitchen chain, which first opened in 2011 in Washington, and recently invested in Pizzeria Locale, a fast-casual restaurant in Colorado. Similar to Chipotle stores, diners can customize their meals at the pizzeria.
The eatery is a “great convenience for folks who normally don’t think of a pizza experience as being quick,” Ells said during a conference on Jan. 14. “By the time they pay, their pizza is ready.”
There are more than 1,500 Chipotle restaurants worldwide, and the company plans to open as many as 195 new ones this year.
Starbucks (SBUX) Corp. earlier this month said that its store traffic growth slowed in December.
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