Chipotle Mexican Grill delivered a quarterly earnings report that buoyed investors as the burrito chain attempts to rebound from its food-safety crisis.
Chipotle shares jumped 6.5% to $446.76 in extended trading Thursday after the company announced that same-store sales, a key industry metric, rose 3.3% in the second quarter, beating analysts’ estimates of 2.7%.
The comp sales increase and the opening of 34 new restaurants pushed revenue up 8.3% to $1.3 billion. Excluding items, earnings came in at $2.87 per share, compared with the $2.80-per-share forecast by analysts.
Chipotle said same-store sales improved primarily as a result of an increase in average check, including a 4.0% effective menu price increase and customers adding queso, partially offset by 1.8% fewer comparable restaurant transactions.
The bottom line reflected declining food costs, which, as a percentage of revenue, dropped to 32.6%, down by about 1.5% from last year as Chipotle got “some relief on avocado prices.”
“I’m pleased to report a solid second quarter with sales and restaurant margins ahead of expectations,” CEO Brian Niccol said in a news release. “While we made progress during the quarter with particular strength in digital sales, I firmly believe we can accelerate that progress by executing our reorganization and our strategy to win today and cultivate tomorrow.”
Niccol, who joined Chipotle in March, has been seeking to revitalize the brand by offering new menu items such as queso and expand digital sales. The company has partnered with the DoorDash and Postmates apps to deliver food to customers.
In the second quarter, digital sales grew 33%, accounting for 10.3% of total sales, and delivery sales quadrupled.
“Digital and delivery orders are an increasingly important part of the industry as they tend to generate larger checks,” CNBC said, noting that on average, online orders are $16 to $17 at Chipotle while in-restaurant checks average around $12.
For the full year, Chipotle is now predicting same-store sales increases in the low to mid-single digits, up from the prior low-single digit expectations.