Chipotle profits beat expectations despite higher costs, Omicron

The logo of Chipotle is seen on one of their restaurants in Manhattan, New York City, U.S., February 7, 2022. REUTERS/Andrew Kelly

Feb 8 (Reuters) – Chipotle Mexican Grill Inc (CMG.N) beat Wall Street estimates for quarterly profits and comparable sales on Tuesday as higher demand and prices for its burritos and rice bowls helped the restaurant chain shrug off a knock from the Omicron variant.

Shares in the company rose more than 8% after the bell.

Surging COVID-19 cases forced many restaurants to trim store hours amid a labor shortage, and rising costs caused other chains including McDonald’s Corp(MCD.N) and Starbucks Corp(SBUX.O) to miss profit estimates.

“We continue to see pressure on wages. We want to make sure that we continue to be competitive on that front,” Chief Executive Officer Brian Niccol said during an earnings call. “Our restaurants are staffed better than they were pre-COVID.”

Chipotle’s move to introduce order-ahead drive-through lanes at more locations, as well as new menu items including smoked brisket, also helped cushion the blow.

The chain reported adjusted earnings per share of $5.58 versus estimates of $5.25.

Higher-than-anticipated beef and freight costs prompted it to hike menu prices 4% in December, but the company has seen “no resistance” to higher prices, Niccol said.

Digital sales grew 3.8% and made up 41.6% of sales in the quarter.

The company also raised its goal for opening new locations over time in North America to at least 7,000 versus 6,000 previously – particularly in smaller towns.

The burrito chain’s comparable sales rose 15.2% in the fourth quarter ended Dec. 31, while analysts polled by Refinitiv expected 14.8% growth.

The company forecast comparable restaurant sales growth in the range of mid-to-high single digits in the current quarter, compared with estimates of 7.6% growth.

Reporting by Praveen Paramasivam in Bengaluru and Hilary Russ in New York; Additional reporting by Anirudh Saligrama in Bengaluru; Editing by Krishna Chandra Eluri and Lisa Shumaker

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