UPDATE 3-Chipotle 3rd-qtr net jumps 75 pct, tops view
(Adds details from conference call, updates share activity)
LOS ANGELES, Oct 30 (Reuters) - Chipotle Mexican Grill Inc (CMG.N) topped Wall Street estimates by reporting a 75 percent rise in quarterly earnings on Tuesday due to more restaurants, more customers and higher menu prices.
Shares of the burrito chain, which has added pricier naturally raised meat to more of its restaurants, rose more than 2 percent.
Third-quarter net income jumped to $20.6 million, or 62 cents per share, blowing past analysts' average estimate of 53 cents a share, according to Reuters Estimates.
In the same period last year, Chipotle earned $11.8 million, or 36 cents per share, a year ago.
The results stood in stark contrast to those of many other restaurant companies, which have been struggling with weakened consumer spending and higher prices on ingredients such as cheese and meat. Chipotle said it has not been affected by higher dairy costs this year because it locked in cheese prices with its supplier last year.
"Once again they are outstanding results," said Morgan Keegan restaurant analyst Bob Derrington, who has a "market perform" rating on Chipotle shares. "It's a tough economic environment, and so far they've been able to stay above the fray and beat expectations."
Chipotle has nearly 670 restaurants in the United States and has enjoyed a supercharged run-up in its share price since it was spun off from McDonald's Corp. (MCD.N) at the beginning of 2006.
The fast-growing company's stock has more than doubled so far this year and trades at 52 times analysts' average 2008 earnings view. That compares with a multiple of 19 for McDonald's and 25 for Starbucks Corp. (SBUX.O)
SAME-STORE SALES SURGE
Chipotle said third-quarter revenue rose 35.6 percent to $286.4 million. Analysts were expecting revenue of $279.5 million, according to Reuters Estimates.
Sales at Chipotle restaurants open at least 13 months, a key retail measure known as same-store sales, rose 12.4 percent, and the company opened 28 restaurants during the quarter.
Restaurant-level profit margins, a measure of how much money each restaurant makes after factoring out costs for labor and food, rose to 23 percent from 21.5 percent. Chipotle said margins benefited from labor efficiencies and menu price increases associated with the addition of more naturally raised meats, meaning the animals are not given antibiotics or growth hormones and are fed all-vegetarian diets.
Chipotle said 80 percent of its restaurants now serve naturally raised chicken, while half serve naturally raised beef. All of them serve naturally raised pork. Chipotle also said it is switching to using milk and cheese made with milk from pasture-raised cows.
For the full year, the Denver-based company said it expects same-store sales to increase in the low double digits in percentage terms. It had previously expected an increase in the high single-digit to low double-digit range.
For 2008, however, Chipotle said same-store sales are expected to rise in the low- to mid-single-digit range. The company also plans to open between 130 and 140 restaurants next year, which will include making inroads into Canada.
On a conference call with investors, Chipotle Chief Executive Steve Ells said the company would open its first restaurant in Toronto by the end of 2008.
Chipotle shares rose to $137 in extended trade after closing at $133.50 on the New York Stock Exchange. (Reporting by Nichola Groom)
