Chipotle Mexican Grill Inc. CMG 0.51% said it increased menu prices again and is likely to raise them further this year, as its chief executive officer said higher costs are unlikely to abate.
Higher menu prices helped the burrito chain boost sales in recent months as it pursues a plan to build hundreds more stores in the coming year, the company said.
For Chipotle’s fourth-quarter ended Dec. 31, it reported per-share earnings of $5.58, after adjusting for one-time items, exceeding analysts’ expectations of $5.25 a share, according to FactSet. The chain reported net income of $133.5 million, down from $191 million a year earlier.
The chain’s total sales were $2 billion, above expectations.
The company’s shares rose 7% in aftermarket trading Tuesday to $1,556. Chipotle’s shares had been down more than 16% this year as investors grew concerned about how rising costs were affecting restaurants.
The Newport Beach, Calif., company said that price increases helped boost its sales during the period. It raised prices by 4% in December, with menu prices now up around 10% overall compared with last year, the company said. Chipotle’s same-stores sales were up 15.2% for the period compared with last year.
Chipotle CEO Brian Niccol said in an interview that the chain will likely increase prices again this year to offset growing wage and food costs.
“I just don’t see the inflation, unfortunately, going away anytime soon,” said Mr. Niccol. He said he’s “chuckled” about comments made earlier in the pandemic about cost increases being short-term: “It sure doesn’t look transitory to me.”
Starbucks Corp. , McDonald’s Corp. and many other chains said they have increased prices as costs have grown and expect inflation to continue to be a concern this year.
Chipotle raised prices on its meals last year, saying it was particularly to help cover the cost of wage increases for hourly workers. The chain has also increased prices on food ordered through food-delivery apps compared with in-store costs.
Chipotle said that costs grew during the quarter, particularly for beef, freight and avocados. Wages were also up during the period compared with last year.
The company said Tuesday that the Omicron variant of Covid-19 began to weigh on its sales growth in December and last month. Restaurant chains, including Chipotle, have limited hours and seating during the latest coronavirus surge as they have struggled to maintain sufficient staffing.
Mr. Niccol said that staffing is improving and the chain is learning how to better manage when employees call in sick. The company’s boost to pay is helping it recruit new workers, he said.
Chipotle said its newer locations outside city centers were delivering robust sales, leading the chain to boost its guidance for overall restaurant-location growth. The chain said Tuesday that it expected to have at least 7,000 Chipotle restaurants in North America over time, up from a previous goal of 6,000 locations.
Most new restaurants will include drive-throughs dedicated to online orders, the company said. Chipotle aims to open 235 to 250 new restaurants this year, it said.
Write to Heather Haddon at [email protected]
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