Chipotle sizzles in Q1; to open 285-plus restaurants in 2024; drops spin-off plan
Chipotle Mexican Grill reported strong first-quarter sales and earnings as traffic rose across all income groups, with consumers remaining unfazed by its higher menu prices.
The quick-serve chain also reiterated its plans to open 285 to 315 restaurants this year as it works towards its long-term goal of doubling its store count to 7,000 locations. Chipotle opened 47 new locations during its first quarter, with 43 including a drive-thru “Chipotlane,” giving it a total of nearly 3,500 restaurants.
The company also revealed that it has dropped its plans for a spin-off — at least for the time being. In February 2023, it debuted a new restaurant, called Farmesa, in ghost kitchen Kitchen United’s food hall at Third Street Promenade in Santa Monica, Calif. Farmesa customers could place an order on-site via kiosks at the Kitchen United space or on Kitchen United’s website. But the ghost kitchen closed in February and Chipotle has no plans to launch a freestanding version of Farmesa, reported CNBC.
Chipotle’s primary focus now is on its own brand, chairman and CEO Brian Niccol said on the company’s earnings call.
“Obviously, if the opportunity presents itself where it would make sense for us to do something outside of the brand, so I would never want to say never, but it’s just not a focus for us right now,” he said.
Chipotle reported its results as it readies for its annual meeting on June 6 at which it will seek shareholder approval for a 50-for-1 stock split — one of the biggest in New York Stock Exchange history — which its board approved in March. If investors vote “yes,” it would be the first stock split in the company’s 30-year history.
The company reported net income of $359.3 million, or $13.01 per share, for the quarter ended March 31, from $291.6 million, or $10.50 per share, in the year-ago period. Adjusted earnings came to $13.37 per share, easily topping analysts’ estimates of $11.69 per share.
Net sales rose 14.1% to $2.7 billion, beating estimates of $2.68 billion. Digital sales represented 36.5% of total sales. Same-store sales increased 7% as traffic rose 5.4%. The average check was up 1.6%.
“We had another outstanding quarter driven by our improvement in throughput and successful marketing initiatives, including Braised Beef Barbacoa and Chicken Al Pastor, which drove strong sales and transactions,” stated Niccol. “The results we are seeing from our focus on developing exceptional people, preparing delicious food and fast throughput gives me confidence that we can achieve our long-term target of more than doubling our business in North America and expanding internationally.”
For the full year, Chipotle now anticipates same-store sales will grow by a mid-to-high single-digit percentage, up from its prior range of a mid-single-digit increase. The company reiterated its forecast of 285 to 315 new locations in 2024.
Chipotle had nearly 3,500 restaurants as of March 31, 2024, in the United States, Canada, the United Kingdom, France and Germany. It is the only restaurant company of its size that owns and operates all its restaurants in North America and Europe.