LOS ANGELES, April 18 Chipotle Mexican Grill Inc
posted a big jump in quarterly profit on Thursday and
said federal investigators have expanded their probe into the
popular burrito chain's compliance with U.S. immigration laws.
Chipotle shares were up 3.5 percent in extending trading
after cost cutting helped insulate earnings from cooling sales
growth and higher food prices.
The news from Chipotle landed as restaurant chains fight for
frugal diners and as U.S. lawmakers embark on renewed efforts to
First-quarter profit at Chipotle rose to $76.6 million, or
$2.45 per share, from $62.7 million, or $1.97 cents per share, a
Revenue was up 13.4 percent to $726.8 million.
Sales at restaurants open at least 13 months, a closely
watched gauge of industry performance, rose 1 percent - just
matching analysts' average estimate compiled by Consensus
Food costs were 33 percent of revenue, an increase of 80
basis points from a year ago, largely due to salsa ingredients
and other produce, dairy and chicken. Chipotle uses organic
ingredients and antibiotic-free meat when possible. As a result,
it is less able than many rivals to lock in ingredient prices.
Denver-based Chipotle - the subject of a three-year federal
probe into its hiring practices - said on Thursday the civil
division of the U.S. Attorney's Office for the District of
Columbia requested work authorization documents for all of its
workers since 2007, plus employee lists and other related
Earlier this week, a bipartisan group of U.S. senators
unveiled an immigration reform bill that, among other things,
would open the door for millions of undocumented workers to one
day become U.S. citizens.
The shares of the nearly 1,500-restaurant chain peaked at
just above $440 about a year ago. In after-hours trading on
Thursday, shares of Chipotle, which has ramped up advertising
and introduced catering to drive additional sales, gained $11.64
But the red-hot growth that propelled the stock to those
levels has cooled under pressure from food costs and rivals that
have mimicked Chipotle's menus.
Those trends have brought out the bears.
Jeffrey Gundlach, chief investment officer and chief
executive of the $56 billion DoubleLine Capital LP, said last
week his latest idea was a "short" bet against Chipotle shares.
A year ago he told investors he was shorting the stock of
Apple Inc at $610 and correctly forecast Apple's stock
price would fall to $425.
Late last year, hedge-fund manager David Einhorn called
Chipotle his latest short idea. He said the shares were
overvalued and the company's business was vulnerable to
competition, including from Taco Bell's new Cantina menu that
resembles Chipotle's but costs less.