Chipotle (CMG) reported better than expected fourth-quarter earnings after the bell on Wednesday. Same-store sales, which is the key metric to watch, were up 6.1%, the highest in six quarters. Analysts were expecting 4.49% growth, according to analysts polled by Refinitiv. Shares climbed higher on the news and were rallying as much as 14% in early morning trading on Thursday.
This is not necessarily indicative of a surge in customers coming into Chipotle. In fact, management says most of the sales increase is due to higher prices.
“Comparable restaurant sales improved primarily as a result of an increase in average check which includes a 3.3% benefit from menu price increases. Comparable restaurant sales also improved due to a 2% increase in comparable restaurant transactions,” according to the company.
The Mexican fast casual chain reported adjusted EPS of $1.72 compared to the expected $1.37. Revenue also came in slightly higher than anticipated at $1.23 billion (compared to $1.19 billion).
Chipotle CEO Brian Niccol has been laser-focused on menu innovation and seamless digital ordering.
Digital sales grew 65.6% and accounted for 12.9% of all sales in the quarter. Digital made up 10.9% of all sales in 2018.
“We believe mild weather and free DoorDash delivery promotions may have driven accelerating [same-store sales] trends,” KeyBanc wrote in a note this week.
To ring in the New Year, Chipotle rolled out a series of healthier “Lifestyle Bowls” that cater to diets currently in vogue.
Offerings include the Paleo, Keto, Whole30® and Double Protein bowls, which Chipotle calls “first-to-category” and “diet-driven.”
In October, the company rolled out a “Rewards” loyalty program in three markets — Kansas City, Phoenix, and Columbus. It’s expected to be available nationwide later this year.
Chipotle has 70,000 employees across more than 2,450 restaurants across the United States, Canada, the UK, France, and Germany. Chipotle opened 137 new stores in 2018 and expects to open between 140 and 155 new restaurants in 2019.
Chipotle had a rough recovery after being hit with a series of food-borne illnesses beginning in 2015. But shares are up around 65% since Niccol took the helm on March 5, 2018. Niccol had previously served as CEO of Taco Bell (YUM).
Yum Brands (YUM) reported Q4 financial results Thursday before the opening bell. Mexican was a bright spot with Taco Bell seeing a 6% bump in sales, which was stronger than the 4.5% growth anticipated by Wall Street.