A customer carries a Chipotle Mexican Grill Inc. bag outside a restaurant in San Francisco, California, U.S., on Monday, July 20, 2020.
David Paul Morris | Bloomberg | Getty Images
Chipotle Mexican Grill on Wednesday reported quarterly same-store sales growth of more than 8%, but a shift to delivery is boosting costs and resulting in fewer drink purchases, which dragged down its net income.
Shares of the company fell more than 5% in after-hours trading.
Here’s what the company reported for the quarter ended Sept. 30 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $3.76, adjusted, vs. $3.47 expected
- Revenue: $1.6 billion vs. $1.59 billion expected
Chipotle reported third-quarter net income of $80.2 million, or $2.82 per share, down from $98.6 million, or $3.47 per share, a year earlier. A higher volume of delivery and steak orders and more expensive beef increased costs, which were partially offset by menu price increases, less salsa usage and lower avocado prices.
Excluding $28.7 million in legal expenses and other items, the burrito chain earned $3.76 per share, topping the $3.47 per share expected by analysts surveyed by Refinitiv.
Net sales rose 14.1% to $1.6 billion, narrowly beating expectations of $1.59 billion. Same-store sales climbed 8.3% in the quarter, hitting a peak in August. Strong demand continued into September, but the company was lapping higher same-store sales growth due to the launch of its carne asada option last year in that month.
For the second consecutive quarter, digital sales more than tripled. Online orders accounted for nearly half of all sales, and about half of Chipotle’s digital customers chose to have their orders delivered.
Delivery service revenue, which includes delivery and service fees paid by customers to Chipotle through its app and website, made up 1.3% of its net sales. The company said that revenue charged to customers doesn’t fully cover the commission fees it pays to third-party delivery providers, such as DoorDash and Grubhub.
The company opened 44 restaurants and permanently closed 3 during the quarter. Twenty-six of the new locations had Chipotle’s drive-thru lanes, which are only for picking up digital orders.
Chipotle once again declined to provide an outlook for 2020, citing the uncertainty of the pandemic.
Read the full earnings report here.
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