(Reuters) -Chipotle Mexican Grill missed Wall Street estimates for quarterly sales on Wednesday, signaling that demand for its rice bowls and burritos was losing steam in the face of higher menu prices and waning household budgets.
Its shares fell more than 8% in extended trading, after the company also projected current-quarter comparable sales to grow in the low- to mid-single-digit range, while analysts on average were expecting a 6.01% increase.
Like other restaurants, Chipotle has hiked menu prices to offset the impact of higher input costs of everything from beef to potatoes, deterring some lower-income customers from ordering its pricier meals at a time when inflation has pressured household budgets.
Sales momentum at the chain softened in the last three weeks of the second quarter, Truist analysts said, pointing to a possible waning in excitement around its Chicken al pastor add-on launch.
The sales miss came even as Chipotle opened 47 new restaurants during the quarter and improved staffing levels at its chains.
However, higher prices and easing costs of some commodities boosted its restaurant-level operating margin by 230 basis points to 27.5%.
“The stock is down because of the outlook, and maybe the implications that consensus estimates on same-store sales may need to come down,” BTIG analyst Peter Saleh said, adding that the sharp fall “seems a little bit dramatic”.
Comparable sales at the fast-casual restaurant chain, known for its Mexican-inspired items, rose 7.4% in the second quarter, compared with analysts’ average estimate for a 7.59% increase, according to Refinitiv IBES data.
Total revenue rose 13.6% to $2.51 billion in the three months ended June 30, also below estimates of $2.53 billion.
(Reporting by Deborah Sophia in Bengaluru; Editing by Devika Syamnath)
