Chipotle shares slide as sales fall short of Wall Street’s expectations

Chipotle Mexican Grill on Wednesday reported quarterly earnings that crushed expectations, but the burrito chain’s sales fell short.

The stock fell more than 9% in extended trading. Shares were up 50% this year through Wednesday’s close.

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

• Earnings per share: $12.65 adjusted vs. $12.31 expected
• Revenue: $2.51 billion vs. $2.53 billion expected

Chipotle reported second-quarter net income of $341.8 million, or $12.32 per share, up from $259.9 million, or $9.25 per share, a year earlier. 

Excluding restructuring costs, closure expenses and other items, the burrito chain earned $12.65 per share.

Restaurant-level operating margins expanded to 27.5% from 25.2% in the year-ago period. Avocado prices were lower than the second quarter of 2022, but higher prices for tortillas, dairy, beef and other ingredients put some pressure on profit.

Last quarter, Chipotle said it was done raising menu prices after hiking them earlier to mitigate rising labor and commodity costs. But executives seemed more open on Wednesday to another round of price increases.

“As we get closer to that fourth quarter, we’ll make a decision exactly on what we want to do on the pricing front,” CEO Brian Niccol said.

Chipotle’s net sales rose 13.6% to $2.51 billion in the second quarter. The company’s same-store sales grew 7.4%, falling shy of StreetAccount estimates of 7.5%. But Niccol said the chain isn’t seeing weaker demand from low-income or high-income consumers.

In March, Chipotle introduced Chicken al Pastor. Executives said the menu item brought new customers to its restaurants in the second quarter, but the limited-time item will wrap up in August. However, it already has plans to release a new menu item for later in the quarter.

The company has also been training…