World News

Chipotle’s earnings beat estimates on higher prices, digital boost

By Hilary Russ

NEW YORK (Reuters) – Chipotle Mexican Grill Inc <CMG.N> raised menu prices and consumers bit, helping the fast-casual burrito chain beat analysts’ estimates for quarterly sales and profit on Tuesday.

Chipotle also attracted diners through deals for members of its loyalty program and boosted online sales with a drive-thru option – called “Chipotlanes” – for orders placed on its app or website.

The company’s steady growth is set to continue in 2020, according to guidance released on Tuesday, as Chief Executive Officer Brian Niccol steers it past the E. coli bacteria outbreaks that sickened customers in 14 states through early 2016.

The California-based company expects to deliver mid-single digit percentage growth in comparable restaurant sales this year.

It plans to open 150 to 165 new restaurants in 2020, with more than half to include drive-thrus.

Part of Niccol’s turnaround success is from digital sales, or orders placed online.

“In just three years, we have quadrupled the digital business, achieving over $1 billion in sales during 2019,” he said during a conference call.

For the fourth quarter ended Dec. 31, digital sales rose 78.3% and accounted for 19.6% of total sales.

Sales from restaurants open for at least 13 months rose 13.4%, beating analysts’ estimate of 9.52%, according to IBES data from Refinitiv.

New menu items also boosted sales, including carne asada, which launched in September as a temporary ingredient.

The premium steak has been so popular that now the company’s supply chain team “is exploring options to see if we can add this as a permanent menu item at some point in the future,” Niccol said.

He also hinted at opening up Chipotle’s partnerships with the delivery platforms DoorDash and Postmates to allow more people to access its bowls, burritos and tacos.

“When the right opportunity presents itself, we’ll figure out whether we bring on additional players,” he said. “We’re open to it.”

Chipotle also plans this year to use database marketing to personalize rewards for the 8.5 million members enrolled in its loyalty program, he said.

Excluding one-time items, the company earned $2.86 per share, compared with estimates of $2.75.

Revenue rose 17.5% to $1.44 billion, slightly higher than the estimate of $1.40 billion.

Net income rose to $72.4 million, or $2.55 per share, from $32.02 million, or $1.15 per share, a year earlier.

It estimates it will pay an effective full-year tax rate in 2020 between 26% and 29%.

(Reporting by Nivedita Balu in Bengaluru and Hilary Russ in New York; Editing by Shinjini Ganguli and Matthew Lewis)