The U.S. chain of fast casual restaurants Chipotle Mexican Grill (CMG, Financial) just came out with its second quarter earnings that topped earnings and revenue estimates.
Bird’s-eye view
The burrito chain registered earnings per share of $2.87 in the second quarter. Revenue during the same period came in at $1.27 billion. The company’s digital sales climbed 33% and made up 10.3% of the chain’s total quarterly sales.
The company’s comparable restaurant chain surged 3.3%. Chipotle attributed this growth to a hike in the menu prices, rise in average check and high demand for queso. Net income during the quarter was $46.9 million, down from $66.7 million reported in the year-ago quarter.
Chipotle also reported an increase in general and administrative expenses, which was 6.7% of the company’s revenue. The company’s expenditure on several initiatives including enhancement of digital experience and modification of operational leadership pushed its G&A expenditure upwards.
After opening 34 new restaurants during the quarter and relocating eight restaurants, the company’s restaurant count came to 2,467. Chipotle’s new CEO Brian Niccol (former CEO of Taco Bell) commented:
“I'm pleased to report a solid second quarter with sales and restaurant margins ahead of expectations,” He added: “While we made progress during the quarter with particular strength in digital sales, I firmly believe we can accelerate that progress by executing our reorganization and our strategy to win today and cultivate tomorrow.”
At the end of the second quarter, the company’s balance of cash and cash equivalents stood at $225.7 million. Inventory as of June 30 amounted to $20.9 million.
Chipotle to take on Taco-Bell in late-night eats
Towards the end of 2015, the company was hit by a food-safety scandal, a sandal where the company lost customer trust and confidence in itself. It is expected that things will turn around for Chipotle once it enters the late-night business.Ă‚
As part of the company’s plans, its late-night menu would comprise a $2 taco-and-drink special along with milkshakes and quesadillas. If Chipotle provides standard and better quality ingredients than Taco Bell, its late-night business can provide huge revenue for the company.
Disclosure: I do not hold any position in the stock mentioned in this article.
