Chipotle's turnaround looks legit

Chipotle's blowout year continues.Sales at stores that have been open for at least a year grew 3.3% last quart...

Posted: Jul 27, 2018 5:21 AM
Updated: Jul 27, 2018 5:22 AM

Chipotle's blowout year continues.

Sales at stores that have been open for at least a year grew 3.3% last quarter, exceeding Wall Street's expectations and sending shares of Chipotle up 6% during after-hours trading.

After struggling for much of the past three years, Chipotle has been on a tear under Brian Niccol, the former Taco Bell CEO who took over in March. Chipotle's stock is up close to 55% this year.

Related: How Chipotle plans to win you back

Chipotle said that higher prices and customers adding queso to their orders lifted sales growth last quarter. Although traffic was down from a year earlier, Chipotle increased menu prices by 4%.

Niccol said Chipotle had not seen evidence that the price increases turned away customers.

Higher prices and a reduction in spending on marketing and promotions helped increase Chipotle's operating margins. Chipotle also got a boost last quarter from lower avocado prices, even though beef prices were up from a year ago.

The menu price hike also helped offset wage inflation.

Related: What higher wages means for Domino's and McDonald's

Chipotle has been raising wages to reduce employee turnover. Analysts say it's been a lingering problem for Chipotle, and increasing pay is one way to attempt to keep workers.

Labor costs are rising at the company. Chipotle spent upwards of $341 million on labor last quarter, a 12% increase from the same time last year.

"We are doing a better job staffing our restaurants," Niccol said. "We have lower year-over-year hourly turnover, which tells us we are making progress on training and building great teams."

Digital sales, including delivery orders, increased 33% last quarter and now make up a tenth of total sales.

Chipotle believes that getting more customers to order on the app will shorten lines. Customers also spend around $5 more when they order off their phones than in the store.

Oregon Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 40443

Reported Deaths: 635
CountyConfirmedDeaths
Multnomah8743155
Marion5590106
Washington546973
Umatilla329543
Clackamas299065
Lane221226
Malheur186634
Jackson15556
Deschutes107413
Yamhill95615
Linn76414
Polk63915
Jefferson5979
Morrow5426
Lincoln50913
Union4582
Benton4186
Klamath4013
Wasco33515
Douglas3314
Hood River2721
Josephine2583
Columbia2491
Clatsop2340
Coos2290
Baker1132
Crook872
Tillamook700
Curry561
Wallowa402
Lake340
Sherman180
Harney170
Gilliam110
Grant100
Wheeler10
Unassigned00
Eugene
Overcast
56° wxIcon
Hi: 60° Lo: 48°
Feels Like: 56°
Corvallis
Overcast
54° wxIcon
Hi: 58° Lo: 46°
Feels Like: 54°
Roseburg
Overcast
56° wxIcon
Hi: 67° Lo: 50°
Feels Like: 56°
North Bend
Overcast
57° wxIcon
Hi: 62° Lo: 51°
Feels Like: 57°
KEZI Radar
KEZI Temperatures
KEZI Planner

LATEST FORECAST

Community Events