(Adds company comment, details on menu prices, GMO)
By Lisa Baertlein
Jan 30 Chipotle Mexican Grill Inc said
on Thursday an increase in customer visits contributed to
bigger-than-expected growth in quarterly sales at established
restaurants, and its shares rose nearly 13 percent in extended
News that the fast-growing burrito chain is considering menu
price increases in the third quarter contributed to the stock
gain because such a move could further boost the chain's sales
The fast-growing burrito chain said sales at restaurants
open at least 13 months, a closely watched gauge of industry
performance, rose 9.3 percent during the fourth quarter, better
than the 6.7 percent expected by analysts, according to
Consensus Metrix. Most of the restaurant sales growth came from
increased traffic, Chipotle said.
Chipotle's results landed after some major restaurant chains
reported cooling or falling sales for the latest quarter.
Traffic to brick-and-mortar stores also posted a steep drop
during the holiday season, as shoppers shopped online from the
comfort of their couches.
U.S. same-restaurant sales at Starbucks Corp were
up 5 percent, mainly because of traffic gains. Still, that
result softened from the prior period.
Elsewhere, sales at McDonald's Corp's U.S.
restaurants open at least 13 months fell 1.4 percent in the
fourth quarter, when overall traffic to its global restaurants
Chipotle's fourth-quarter net income increased nearly 30
percent to $79.6 million, or $2.53 per share, matching analysts'
average estimate, according to Thomson Reuters I/B/E/S.
Food costs were 33.9 percent of revenue, an increase of 40
basis points, due mostly to higher avocado costs, but also to
costs for tomato and corn salsa. Those increases were partially
offset by lower dairy and steak costs.
A price increase in the ballpark of 3 percent to 5 percent
is likely in the third quarter to help offset higher food costs,
although no decision has been made, Chief Financial Officer Jack
Chipotle, known for using antibiotic-free meats and organic
produce when possible, was the first major U.S. restaurant chain
to announce plans to remove food ingredients containing
genetically modified organisms, or GMOs, from its supply chain.
"As of now, all of our cooking oils used in North America
are made from ingredients that are not genetically modified, and
there are only a few key steps left before all of our food is
made without genetically modified ingredients," said Steve Ells,
Chipotle's founder, chairman and co-CEO.
The company plans to finish removing GMO ingredients from
its corn and flour tortillas by the end of this year, Ells said.
Chipotle raised its 2014 forecast to call for low to mid
single digit same-restaurant sales increases, excluding any menu
price increases. Its prior call was for an increase in the low
Executives also plan to open 180 to 195 new Chipotle
restaurants in 2014, more than ever before.
Chipotle sales rose 12.6 percent to $556.28 in extended
trading after closing at $493.96.
(Reporting by Lisa Baertlein in Los Angeles; Editing by Steve
Orlofsky and Andre Grenon)