Chipotle’s sales have once again exceeded Wall Street expectations – boosted by price increases and a rise in the number of loyal customers.
Despite menu items becoming more expensive, more Americans visited the Mexican restaurant chain in the first three months of this year.
That created a double whammy: more burritos were sold, each at a higher price. In some cases they are a dollar more than a year ago, around $12.
While most U.S. restaurant and fast-food chains have seen customer numbers — and spending — weaken in recent months, Chipotle is bucking the trend.
Announcing its first quarter 2024 results, the company reported total revenue of $2.7 billion – up 14.1 percent from a year earlier.
Chipotle once again beat market expectations with its quarterly results, boosted by increased traffic to its restaurants
This was due to the opening of new restaurants, and a 5.4 percent increase in restaurant traffic from the previous year.
In the first three months of this year, the burrito chain opened 47 new locations in the U.S., the company said.
For the remainder of 2024, the company reiterated its goal of opening between 285 and 315 locations.
In February, Chief Financial Officer Jack Hartung told analysts that “unusually cold weather” had deterred visitors and hurt sales in January. CNBC reported.
Demand is likely to rebound in the remainder of the quarter, compensating for a slower first month.
Unlike other food chains, Chipotle is seeing an increase in visitors despite price increases.
The California-based company increased the price of its burritos and rice bowls by 3 percent last October.
It was the fourth time in the past two years that the chain has raised prices, and the cost increase was attributed to persistent inflation.
According to Business insiderBefore the price increase in October, a chicken burrito bowl cost $10.95 at a location in Brooklyn, New York City.
After the increase, the same bowl cost $11.35 without extra guacamole or queso, according to Chipotle’s website. These can add $2.95 and $1.80 respectively.
In the first three months of this year, the burrito chain opened 47 new locations in the US
Despite menu items becoming more expensive, more Americans visited the Mexican restaurant chain in the first three months of this year
Earlier this month, Chipotle raised prices in California to offset the state’s higher minimum wage for fast-food workers.
According to a report from Kalinowski Equity Research, prices rose 7.5 percent, meaning an $11 burrito bowl, for example, would end up costing closer to $12.
CEO Brian Niccol told CNBC on Wednesday that the company has no plans for further price increases.
Following the earnings results, shares in the company rose in extended trading.
At its last results in January, Chipotle admitted that charging more on burritos helped boost profits by 37% to $1.2 billion last year – with the chain also helped by lower costs on avocados.
Improvements in store efficiency have also further helped attract more customers.
Following the earnings results, shares in the company rose in extended trading
Chipotle noted that customer transactions in the quarter were up 7.4 percent from a year earlier, while the average amount spent per order increased 1 percent.
While Chipotle has seen higher costs for some ingredients, such as beef and queso, the cost of other raw materials, such as paper and some vegetables, have fallen in recent months, boosting margins at the company.
While Chipotle has seen an increase in footfall, fellow food companies McDonald’s and Starbucks both reported a drop in footfall over the final three months of last year.
Traffic at McDonald’s U.S. stores fell 13 percent last October, according to Placer.ai data cited by Wells Fargo.
In November and December the economy fell by 4.4 percent and 4.9 percent respectively.
Despite this, the fast food giant still managed to increase profits by 7 percent by charging customers more for McMuffins, Big Macs, McNuggets and fries.