Operations

Chipotle raising menu prices - again

Provided

July 27, 2022

A 4% increase in menu prices helped give Chipotle Mexican Grill a solid second quarter, according to CFO John R. Hartung, who said the chain was planning a second 4% hike in August.

"The benefit of menu price increases offset elevated costs across the board, most notably in avocados, packaging, dairy, beef and chicken," he said Tuesday during a call with investors.

The chain posted Q2 earnings of $259.9 million, or $9.25 a share compared to last year's $188 million, or $6.60 a share. Revenues were up 17% to $2.2 billion and same-restaurant sales increased 10 %, according to a company press release.

"We are pleased with our second quarter performance during a period of inflation and consumer uncertainty," Brian Niccol, chairman and CEO, said in the release. "Our pricing power and value proposition remain strong as our culinary and food with integrity commitment continues to be a key point of differentiation."

Assuming current sales trends continue, Hartung said during the call he expects the chain's Q3 comp sales to be in the mid-to-high single-digit range, which includes "a planned August pricing increase of about 4% to help offset incremental inflation pressures, especially in dairy, tortillas and packaging as well as pockets of wage pressure throughout the country."

Second quarter highlights, year over year, were:

• In-restaurant sales increased 35.9%, while digital sales represented 39.0% of food and beverage revenue.
• Operating margin was 15.3%, an increase from 13%.
• Restaurant-level operating margin was 25.2%, an increase of 70 basis points.
• Opened 42 restaurants, with 32 locations featuring a Chipotlane.

During Q2, the board of directors approved the investment of up to an additional $300 million to repurchase shares of the chain's common stock.

For 2022, management is anticipating the following:

• Third quarter comparable restaurant sales growth, including planned price increases in August, in the mid- to high-single digits.
• Between 235 to 250 restaurant openings (including 10 to 15 relocations to add a Chipotlane).

Chipotle has over 3,000 locations.