Chipotle Mexican Grill (NYSE: CMG) topped revenue and earnings estimates for the third quarter of 2019. After gaining over 1% following the earnings announcement, the stock dropped in aftermarket hours on Tuesday.
Revenues of $1.40 billion were up 14.6% from the same period last year and above estimates of $1.38 billion. Revenue results were driven by higher comparable restaurant sales.
Comparable restaurant sales rose 11%, helped by a 7.5% growth in transactions and a 3.5% increase in average check. The results benefited from the menu price increases that were rolled out last year. Digital sales grew 87.9% and accounted for 18.3% of sales for the quarter.
Net income more than doubled to $98.6 million, or $3.47 per share, from $38.2 million, or $1.36 per share, in the prior year period. Adjusted EPS grew 77% year-over-year to $3.82, beating forecasts of $3.19.
Food, beverage and packaging costs were 33.2% of revenue, down 20 basis points from last year due to menu price increases. Restaurant level operating margin increased to 20.8% from 18.7% in the prior-year period, helped by higher comparable restaurant sales.
For full-year 2019, Chipotle expects to be at the top end of its prior high single digit comparable restaurant sales growth guidance.
Chipotle opened 25 new restaurants during the quarter, including one relocation, and closed one restaurant, bringing the total restaurant count to 2,546. Based on the early success of Chipotlanes, the company has decided to add around 60 Chipotlanes by the end of 2019.
Due to the longer construction time, some of the new openings are likely to shift from the fourth quarter to 2020, so the company expects total openings for 2019 to fall at or slightly below the low end of the guidance range of 140 to 155 openings. For 2020, Chipotle expects to open 150-165 new restaurants, with more than half including a Chipotlane.
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