Shares of Chipotle Mexican Grill (CMG) are down nearly 10% after the quick service restaurant chain posted second-quarter earnings and guidance that disappointed analysts.
The company, which specializes in Mexican cuisine, announced Q2 earnings per share (EPS) of $12.65 U.S. versus $12.31 U.S. that had been expected among analysts, according to Refinitiv data.
Revenue in the quarter came in at $2.51 billion U.S., which was below the consensus expectation of $2.53 billion U.S.
The company’s restaurant-level operating margins grew to 27.5% in the latest quarter from 25.2% a year ago.
Chipotle said that higher prices for tortillas, dairy, beef, and other ingredients pressured their Q2 profits.
The company’s same-store sales grew 7.4% in Q2, falling short of Wall Street estimates for growth of 7.5%.
Digital sales accounted for 38% of the company’s food and beverage revenue during Q2. Chipotle opened 47 new locations, 40 of which included drive-thru lanes to serve digital orders.
The company recently reorganized its corporate structure to put more investments in digital marketing and international expansion.
Last quarter, Chipotle said it was done raising menu prices after hiking them earlier to mitigate rising labor and commodity costs due to inflation.
Looking ahead, Chipotle reiterated its full-year forecast of same-store sales growth in the mid-to-high single digit range.
However, for the current third quarter, Chipotle anticipates same-store sales growth in the low-to-mid single digit range. Wall Street had been looking for Q3 same-store sales growth of 5.9%.
Prior to today (July 27), Chipotle’s stock had risen 52% this year to trade at $2,087.86 U.S. a share.
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