Chipotle Mexican Grill (CMG) Q3 2023 earnings

Chipotle Mexican Grill on Thursday reported quarterly earnings that beat expectations, helped by higher menu prices for its burritos and bowls.

Shares of the company rose more than 2% in extended trading.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

• Earnings per share: $11.36 adjusted vs. $10.55 expected
• Revenue: $2.47 billion, in line with expectations

The burrito chain reported third-quarter net income of $313.2 million, or $11.32 per share, up from $257.1 million, or $9.20 per share, a year earlier. Excluding corporate-restructuring costs, Chipotle earned $11.36 per share.

Beef and queso costs rose this quarter, largely offsetting last year’s menu price hikes. Earlier this month, the restaurant chain raised menu prices for the first time in more than a year, citing inflation.

The company had paused its aggressive price hikes earlier this year as consumers pulled back their spending. Still, executives have maintained that Chipotle has pricing power and more room to run.

“I think the Chipotle value, when we haven’t raised prices in over a year until this latest action, is coming through, and people are choosing to dine at Chipotle because we are very affordable,” CFO Jack Hartung said on the company’s conference call.

Customers in California can also expect to pay even more for their burritos next year. Executives said the company will pass along the higher labor costs that will come from California raising wages for fast-food workers to $20 an hour in April. About 15% of Chipotle’s restaurants are in California.

“We are definitely going to pass this on, we just haven’t made a final decision on as to what level yet,” Hartung said.

Chipotle’s net sales climbed 11.3% to $2.47 billion. Same-store sales rose 5%, beating StreetAccount estimates of 4.6%. The company credited higher transactions and menu prices for the quarter’s same-store sales growth. Chipotle prices were up 2.8% compared with the year-ago period, due to last year’s price hikes.

CEO Brian Niccol said that traffic trends have remained strong in October, helped by the recent return of carne asada as a limited-time menu item.

Chipotle opened 62 new restaurants during the quarter. All but eight of those locations featured a “Chipotlane,” a drive-thru lane reserved for picking up digital orders.

Looking to 2024, the company expects that it will open 285 to 315 new restaurants.

Chipotle also reiterated its forecast for 2023 same-store sales growth in the mid-to-high single digit range.