Chipotle Q1 profit up, sales disappoint

Chipotle Mexican Grill, Inc’s first quarter results were mixed. The chain posted an increase in profit for its first quarter, higher than expectations, while revenue fell shy of forecasts and same-store sales disappointed investors.

Net income for the quarter increased to $122.6 million, from $83.1 million last year. Revenue rose to $1.09 billion from $904 million a year ago.

Diluted earnings per share was $3.88, an increase of 47.0 percent.

Chipotle said that comparable restaurant sales rose by 10.4 percent, lower than the 11.7 percent increase Wall Street analysts polled by Reuters had forecast.

Food costs were 33.9% of revenue, a decrease of 60 basis points, with the benefit of a menu price increase partially offset by increased beef and tortilla costs compared to the first quarter of 2014.

Chipotle Restaurant

A Chipotle restaurant in Brandon, Florida

Steve Ells, founder, chairman and co-CEO of Chipotle, said:

“We are very proud of our start to 2015, as our average sales volumes reached a record $2.5 million per restaurant. We attribute this success to our unique food culture and people culture, which are the driving forces to create a new fast food model.

“The quarter was not without its challenges however, as we suspended one of our primary pork suppliers and are exploring options to increase the supply of pork that meets our high standards. But we remain confident that higher quality, Responsibly Raised® ingredients taste better and will continue to resonate with our customers,”

The restaurant chain did not say when it expects supplies to be fully recovered.

Chipotle, which has about 1,800 locations, opened 49 new restaurants in the first quarter.

In 2015 the company expects to open 195-205 restaurants and achieve same-store sales growth in the low-to-mid single digits.

Monty Moran, co-CEO of Chipotle, said:

“Our teams of top performers continue to create extraordinary customer experiences in our restaurants, which generates customer loyalty and attracts new customers. We are very pleased with our field leadership’s ability to empower restaurant teams and develop new leaders.

“This competitive advantage is at the heart of our people culture, and we believe will continue to deliver strong business results throughout 2015.”

Chipotle stock dropped 5 percent after the report.