UPDATE 2-Chipotle fourth-quarter earnings top estimates

(Adds details from conference call, executive comments, byline, analyst comment)

By Nichola Groom

LOS ANGELES, Feb 15 (Reuters) - Chipotle Mexican Grill Inc. (CMG.N) on Thursday said fourth-quarter profit more than doubled, beating Wall Street estimates, as it opened 35 restaurants and recorded strong sales increases at older ones, sending its shares up more than 4 percent.

Fourth-quarter net income rose to $10.8 million, or 33 cents per share, above the average Wall Street estimate of 28 cents a share, according to Reuters Estimates.

In the same period last year, Chipotle earned $4.3 million, or 16 cents per share.

Chipotle -- known for burritos made with organic beans and naturally raised chicken and beef -- operates more than 570 restaurants in the United States. The company was spun off from McDonald's Corp. (MCD.N) last year.

Revenue rose 26.8 percent to $219.7 million. Analysts' average estimate was $216.4 million, according to Reuters Estimates.

Sales at stores open at least 13 months, a key retail measure known as same-store sales, rose 10.1 percent during the quarter.

Morgan Keegan analyst Bob Derrington said both overall revenue and same-store sales topped his estimates.

At the same time, restaurant-level operating margins, a measure of restaurant profitability, rose to 20.3 percent from 18.6 percent thanks in part to higher menu prices as the company added more higher-priced naturally-raised chicken and beef to its restaurants.

More than half the chicken and 40 percent of the beef Chipotle uses is naturally raised, meaning the animals are not given antibiotics or growth hormones and are fed all-vegetarian diets, Chief Operating Officer Monty Moran said on a conference call with analysts.

The company is working to find more suppliers so it can one day serve only naturally-raised meat in its restaurants, he added.

Chipotle plans to open 95 to 105 restaurants in 2007, compared with 94 in 2006. It also forecast same-store sales increases in the low to mid-single digits on a percentage basis for the year.

Looking ahead, Moran said restaurant-level margins would likely be pressured by higher avocado costs due to cold winter weather that damaged crops in California.

"We are hearing pretty loud and clear that there will be pricing impact," he said.

In addition, higher grain costs are driving up chicken prices, he said.