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Mayank Marwah
Mayank Marwah
Articles (594) 

Key Takeaways From Chipotle’s 4th-Quarter Earnings

Company benefited from changes in the tax law

February 08, 2018 | About:

Fast-casual restaurant chain Chipotle Mexican Grill Inc. (NYSE:CMG) topped fourth-quarter earnings expectations on Tuesday due mostly to higher menu prices.

While the company had higher commodity and labor costs, it managed to reduce its marketing costs as well as increase prices, which helped boost Chipotle’s margins.

Diving into the numbers

Chipotle’s fourth-quarter adjusted earnings per share came in at $1.32, just shy of the consensus estimate of $1.34.

Its revenue for the quarter increased 7.3% year over year to $1.11 billion, which was in line with Thomas Reuters' expectations.

The restaurant reported full-year revenue of $4.5 billion, which increased 14.7% from 2016. The company’s digital sales soared 50% in 2017, powered by mobile ordering.

Same-store sales for the quarter increased 0.9%, beating projections of 0.8% growth. Chipotle's same-store sales increased 6.4% for the year.

The company’s operating margin was 16.9% for year, which was an improvement from 12.8% in 2016.

Outlook for 2018

The company provided guidance for 2018, saying it expects comps to increase by low single digits. In addition, the company plans to open 130 to 150 new stores.

In a statement, CEO Steve Ells commented on the company's outlook for the year.

"Our focus this year will be to continue perfecting the dining experience, enhancing the guest experience through innovations in digital and catering, and reinvesting in our restaurants," he said.

Chipotle said that as a result of the Tax Cuts and Jobs Act, it has realized between $40 million and $50 million in savings. The company will devote one-third of this amount to its employees by distributing bonuses, providing new training programs and expanding parental leave. The remainder will be invested in improving its stores.

Chipotle is also currently searching for a new CEO who can take the company forward with proper innovation and sales-driving techniques.

Disclosure: I do not have any positions in the stocks mentioned in this article.

About the author:

Mayank Marwah
A seasoned writer with keen interest in the automotive, technology, telecommunication, retail and aerospace sectors.

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