Chipotle stock sinks as restaurant chain reports falling traffic, weak guidance - CNBC
Chipotle Mexican Grill Releases Strong Q4 Earnings, Traffic Slows
On Tuesday, Chipotle Mexican Grill, a leading fast-casual restaurant chain, released its quarterly earnings and revenue report for the fourth quarter of 2023. The company's performance exceeded analysts' expectations in terms of revenue, but fell short in terms of traffic to its restaurants.
Revenue and Earnings Beat Expectations
Chipotle Mexican Grill reported revenue of $2.08 billion for the fourth quarter of 2023, surpassing the analyst estimate of $1.97 billion. The company also reported net income of $134.8 million, which was higher than the expected net income of $122.9 million.
The strong revenue performance was driven by a combination of factors, including:
- Menu price increases: Chipotle implemented menu price increases in 2023, which helped to boost revenue.
- Increased sales of online ordering and delivery: The company's online ordering and delivery business grew significantly during the fourth quarter.
- Expansion of catering services: Chipotle expanded its catering services, which contributed to increased revenue.
Traffic Falls for Fourth Straight Quarter
However, traffic to Chipotle restaurants fell for the fourth straight quarter. According to data from ScrapeHero, a company that tracks restaurant traffic, Chipotle's average daily customer count declined by 2.5% in the fourth quarter compared to the same period last year.
The decline in traffic is consistent with broader trends in the fast-casual industry, where consumers are increasingly opting for delivery and takeout services rather than dining in.
2026 Guidance
For 2026, Chipotle Mexican Grill provided guidance on revenue and earnings expectations. The company forecasted:
- Revenue growth: Revenue is expected to grow by 10% to 12% in 2026.
- Earnings per share (EPS): EPS is expected to be in the range of $8.50 to $9.50.
The guidance suggests that Chipotle expects strong revenue growth in 2026, driven by a combination of factors including menu price increases and expansion of online ordering and delivery services.
Outlook
Chipotle Mexican Grill's strong Q4 earnings report and guidance for 2026 suggests that the company is well-positioned for continued success. However, the decline in traffic to its restaurants highlights the need for the company to focus on increasing customer count and improving customer satisfaction.
The company has a number of initiatives underway to address these challenges, including:
- Investment in digital transformation: Chipotle is investing heavily in digital transformation, including online ordering and delivery systems.
- Expansion of catering services: The company is expanding its catering services to provide more opportunities for customers to enjoy Chipotle's food outside of the restaurant.
Overall, Chipotle Mexican Grill's strong Q4 earnings report and guidance for 2026 suggest that the company is well-positioned for continued success. However, the decline in traffic to its restaurants highlights the need for the company to focus on increasing customer count and improving customer satisfaction.
Key Takeaways
- Revenue beats expectations: Chipotle Mexican Grill's revenue exceeded analyst estimates.
- Traffic falls for fourth straight quarter: The decline in traffic is consistent with broader trends in the fast-casual industry.
- 2026 guidance: The company forecasted strong revenue growth and EPS increases.
Financial Highlights
| Category | Q4 2023 | Q4 2022 | | --- | --- | --- | | Revenue | $2.08 billion | $1.95 billion | | Net Income | $134.8 million | $114.9 million | | Average Daily Customer Count | 13,100 | 14,200 |
Management Commentary
"We are pleased with our Q4 results, which exceeded analyst expectations," said Brian Niccol, CEO of Chipotle Mexican Grill. "We continue to focus on providing high-quality food and a great customer experience, while investing in digital transformation and expansion of catering services."