October 17, 2013

Chipotle’s profits heat up as it draws more diners

The fast-food Mexican chain is performing better than many of its competitiors, including McDonald’s and Burger King.

The Associated Press

NEW YORK – Chipotle says its profit rose 15 percent in the third quarter as more customers flocked to its restaurants for burritos, tacos and bowls.

click image to enlarge

In this December 2010 file photo, Kyle Braley stirs a tomatillo green chili salsa at Chipotle Mexican Grill in South Portland. The popular restaurant chain, which serves naturally-raised beef, chicken and pork, has seen its profits skyrocket as more Americans look for slightly higher-quality fast food.

Gregory Rec/Staff Photographer

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The Denver-based company said sales at restaurants open at least a year, a key metric, rose 6.2 percent in the period, driven by higher customer traffic. The sales jump follows a 4.8 percent increase a year ago.

Chipotle, which has more than 1,500 locations, has surged in popularity because customers see it as being a step up from traditional fast-food chains such as Burger King and Wendy’s. People also like that they can customize their orders, dictating which ingredients they want on their orders.

The company’s healthy sales performance is in contrast to the performance of several major food companies including McDonald’s in recent quarters, which have cited the challenging economy for underwhelming sales results.

But some companies seem from insulated from such outside factors. Starbucks, for instance reported a surprisingly strong 9 percent sales increase at locations open at least a year in its most recent quarter.

As for Chipotle, the chain’s “Food With Integrity” ethos has also helped it cultivate a powerful marketing message. It recently generated buzz online with a cartoon video depicting a dystopian world where big food companies fatten chickens with injections and keep cows stuffed in crates. By contrast, the video depicted Chipotle’s food as being homemade from fresh ingredients.

The video got more than 7 million hits on YouTube.

For the quarter, Chipotle Mexican Grill Inc. earned $83.4 million, or $2.66 per share. That’s up from $72.3 million, or $2.27 per share, a year ago. Analysts expected $2.78 per share.

Revenue rose 18 percent to $826.9 million, topping the $820.3 million analysts expected.

For the year, the company said it expects sales at restaurants open at least a year to grow by a mid-single-digit percentage. For 2014, it forecast low-single-digit growth, excluding any menu price increases.

Its stock rose almost 2 percent in after-hours trading.

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