Chipotle Mexican Grill Inc (CMG.N) beat estimates for quarterly same-store sales on Thursday, as customers returned to eating inside restaurants and paid more than ever for a new meat – smoked brisket – and other menu items.
The burrito and bowl chain has raised regular menu prices twice and its delivery prices three times since August 2020. Prices are now about 10% higher – which includes a total 17% hike in items for delivery – to offset rising beef, freight and labor costs.
CEO Brian Niccol told Reuters that customers can still get a lot of value out of a Chipotle meal, noting that its chicken burrito is still priced under $8 in many places.
“Because we’ve got such a strong value proposition, we like to take things in phases to make sure that the pricing we’re taking is balanced with the growth that we’re experiencing and that the cost is really not a transitory cost but a new, permanent cost,” he said.
Overall, fast-food chains have raised menu prices by 6.7% over the last 12 months, and other restaurants by 5.2%, the U.S. Bureau of Labor Statistics reported on Oct. 13.
Some of Chipotle’s price hikes will roll off this quarter and customers have not resisted paying more for their quesadillas, Niccol said.
More customers are also coming to Chipotle restaurants as seating areas reopen, and the chain is still on track to build 200 new locations this year, he said.
Chipotle’s limited-time smoked brisket, which launched in September, costs $10.25 on average as an entree in restaurants, its most expensive new meat ever.
The fast-casual chain posted a 15.1% surge in comparable sales for the quarter ended Sept. 30, compared with analysts’ average estimate of 13.4% growth, according to Refinitiv data.
The company also forecast sales growth in the low to mid double-digits range in the current quarter, compared with estimates of 14% growth.
Americans who were cooking more in their kitchens during the pandemic-induced, work-from-home situation are now grabbing burritos and bowls on the way to work and social gatherings, and are trying new dishes.
Sales from digital orders – as opposed to those placed in person – grew 8.6% and accounted for 42.8% of sales.
Chipotle also said its board increased its share repurchase authorization by $100 million, with $209.8 million available to buy back shares as of Sept. 30.