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Chipotle Mexican Grill (NYSE:CMG) confirmed on Wednesday that it plans to hike prices again to offset inflation.
The fast-casual restaurant operator said the menu prices will be the first in over a year. Chipotle (CMG) fired off menu prices increases once in 2021 and twice in 2022.
Chiptole (CMG) is due to report Q3 earnings on October 26. With its Q2 report, the company reported comparable sales increased 7.4% in Q2 to fall slightly short of the consensus mark of +7.7%. The comparable sales mark was a sequential decline from the +10.9% rate seen in Q1. In-restaurant sales increased 15.8% during the quarter, while digital sales represented 38.0% of total food and beverage revenue. Operating income jumped to 17.2% of sales from 15.3% of sales a year ago, but missed the consensus expectation of 17.5%. EPS came in at $12.65 vs. $12.28 consensus and $9.30 a year ago. For Q2, restaurant-level margin was up 230 bps year-over-year to 27.5% of sales during the quarter vs. the consensus estimate of 27.2%. The improvement was primarily due to the benefit of sales leverage and, to a lesser extent, lower avocado prices. Thoaw decreases were partially offset by higher inflation across several food costs, and to a lesser extent, wage inflation. Food, beverage and packaging costs were down 100 basis points compared to a year ago to 29.4% of revenue. The drop was a result of the menu price increases taken in the prior year and lower avocado prices, which were partially offset by inflation across several food costs, primarily beef, tortillas, dairy, salsa, beans and rice.
Shares of Chipotle (CMG) have not recovered back to the level from where they stood before the Q2 earnings report was released, but are still up more than 30% on a year-to-date basis.
