(Reuters) - Chipotle Mexican Grill Inc (CMG.N) reported quarterly profit that beat Wall Street forecasts as sales at established restaurants topped analysts’ views, helped by more customer visits and last year’s menu price increases.
The upscale burrito chain, which was spun out of McDonald’s Corp (MCD.N) in 2006, operates in the so-called fast-casual restaurant category. That group has won a big following lately with diners who want higher quality food served quickly and at prices below those of full-service restaurants.
Chipotle uses organic ingredients when possible and is one of the restaurant industry’s best-performing names, largely due to its ability to hold down labor costs amid blisteringly fast growth.
The Denver-based company raised menu prices in the Pacific region in March, but does not plan any more price increases this year to offset higher costs for ingredients such as beef and cheese.
First-quarter net income rose 35 percent to $62.7 million, or $1.97 per share, at Chipotle, which competes with Jack in the Box Inc’s (JACK.O) Qdoba burrito chain.
Analysts, on average, were looking for a profit of $1.93 per share, according to Thomson Reuters I/B/E/S.
First-quarter revenue rose a better-than-expected 26 percent to $640.6 million.
Sales at restaurants open at least 13 months were up 12.7 percent, blowing past the 10.5 percent rise expected by analysts polled by Thomson Reuters.
Chipotle repeated its forecasts for 2012 growth in sales at established restaurants in the mid-single digit percentage range and a similar rise in food inflation.
In April last year, the company revealed that the criminal division of the U.S. Attorney’s office for Washington, D.C., had opened an investigation and asked it to turn over documents related to U.S. Immigration and Customs Enforcement audits.
The company fired hundreds of workers as a result of the ICE audits, which boosted turnover and costs related to training new employees. Employee turnover also can slow down service and frustrate diners.
Chipotle’s shares doubled from $22 to $44 on their first day of trading in 2006 and closed at $430.78 on Thursday, near historic highs. The shares rose 1 percent to $435 in extended trading.
Reporting By Lisa Baertlein in Los Angeles; editing by Bernard Orr and Andre Grenon