Tags: Chipotle | growth | restaurant | estimates

Chipotle Predicts Slower 2015 Growth After Topping Estimates

Monday, 20 Oct 2014 07:30 PM

Chipotle Mexican Grill Inc., which has been the best performer in the Standard & Poor’s 500 Restaurants Index this year, projected a slowdown in sales growth for 2015, raising concerns about the company maintaining its hot streak.

Sales at restaurants open at least 13 months will increase in the low- to mid-single digits next year, the Denver-based company said Monday in a statement. That compares with growth in the mid-teens this year, Chipotle said. Analysts estimated same-store sales growth of 7.2 percent in 2015, according to Consensus Metrix.

The shares declined as much as 4.4 percent to $624 in extended trading after the results were released. Chipotle had climbed 23 percent this year through Monday’s close, the biggest gain in the S&P 500 Restaurants Index.

The company’s 2015 sales forecast doesn’t reflect “the most powerful growth story,” said Jason Moser, an analyst at the Motley Fool in Alexandria, Virginia, who recommends buying the shares. “That’s just an early projection — that could turn out to be very conservative, that could turn out to be spot on.”

The company had been bucking the trend of sluggish sales at U.S. restaurants, with customers flocking to the chain in search of healthier fare and the option to customize their meals. Same- store sales rose 20 percent last quarter. Analysts estimated 17 percent, the average of 24 projections from Consensus Metrix.

Quarterly Earnings

Third-quarter net income jumped 57 percent to $130.8 million, or $4.15 a share, from $83.4 million, or $2.66, a year earlier. The average of 25 analysts’ estimates compiled by Bloomberg was $3.83 a share. Revenue climbed 31 percent to $1.08 billion, exceeding analysts’ $1.06 billion projection.

Catering sales and higher prices have helped boost results. Catering made up 1.6 percent of revenue in the second quarter, Co-Chief Executive Officer Monty Moran said on a conference call in July.

Chipotle, which has more than 1,700 restaurants, recently raised U.S. menu prices by 6.25 percent to 6.5 percent on average. The company is seeing higher costs for major ingredients, including beef, avocados and dairy.

While avocado costs probably will stabilize next year, beef prices will remain high, Chief Financial Officer Jack Hartung said on a conference call. So far, the company has seen little resistance to its menu price increases, he said.

The company also will see higher labor costs after employees begin enrolling in health-care insurance, he said. About 10,000 hourly workers will have the chance to sign up this year, he said.

The company is planning to open as many as 195 new restaurants this year and 205 next year.

© Copyright 2017 Bloomberg News. All rights reserved.

   
1Like our page
2Share
Companies
Chipotle Mexican Grill Inc., which has been the best performer in the S&P 500 Restaurants Index this year, projected a slowdown in sales growth for 2015, raising concerns about the company maintaining its hot streak.
Chipotle, growth, restaurant, estimates
428
2014-30-20
Monday, 20 Oct 2014 07:30 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved