Chipotle Mexican Grill (NYSE: CMG) reported solid results for the first quarter, surpassing analyst estimates on the top and bottom line. The restaurant chain’s comp-sales growth also beat street expectations. Backed by the solid growth in key business metrics, Chipotle is lifting its comp-restaurant sales outlook for 2019.
The fast-casual restaurant chain’s stock has been having a dream run in the bourses over the past 12 months touching a three-year high-level last week. The chain’s stock has surged 64% this year backed by the solid Q4 results reported by the burrito seller.
It has been one year since Brian Niccol dons the CEO hat of Chipotle, who joined from Taco Bell. Under Niccol’s leadership, the company’s turnaround story has been well received by investors with the stock skyrocketing 120% since he took over the corner office last year.
The chain saw 13.9% improvement in sales to $1.3 billion aided by new restaurant openings and an increase in comp-restaurant sales. Adjusted EPS jumped 59.6% to $3.40 which also benefitted from an increase in interest income and lower tax provisions.
Chipotle’s comp-store sales grew 9.9% topping analyst estimates of 7.29%. On the headline numbers, analysts were expecting adjusted EPS of $2.99 and sales to come in at $1.26 billion.
On the other key metrics front, comp-store transactions increased 5.8% and restaurant operating margins grew 150 basis points to 21% driven by higher comp sales offset by wage increases, marketing, and delivery expenses. Last quarter, margins stood at 17%.
CEO Brian Niccol when commenting on the Q1 performance said, “The ongoing improvement in each of our key operating metrics over the past few quarters gives us confidence that our mission to win today and cultivate the future is resonating.”
Niccol has been investing heavily in marketing, especially on the digital front. This has been bearing fruit for the chain over the past few quarters. In Q1, orders placed via digital mode rose a whopping 100.7% and now contributes 15.7% to the top line.
Store count at the end of the first quarter stood at 2,504 with the chain opening 15 restaurants in the Q1 and closed two during the period. Chipotle plans to open 140 to 155 new restaurants in 2019 and most of the new openings are expected to come in the latter half of the year.
The Mexican chain has revised upwards the comp-restaurant sales growth. It now expects growth to come in the range of mid to high-single-digit compared to mid-single digit growth announced last quarter.
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