Chipotle is expected to ring up another bowl of positive earnings, as investors wait for the latest numbers after the bell on Wednesday.
Limited time offers like the return of the Carne Asada and Chicken Al-Pastor, which are priced at a premium, can help boost results against a difficult macro consumer backdrop. The chain, which saw its foot traffic hold up in 2023, is battling against higher labor costs and sticky inflation — though it implemented higher prices to offset those headwinds.
“Chipotle has been among the best-performing restaurant stocks and we expect fundamental strength to continue to drive outperformance — traffic-driving initiatives (throughput, innovation, loyalty) and strong pricing power support sustainable MSD+ (mid-single digit) same-store sales growth,” Lauren Silberman of Deutsche Bank wrote in a note to clients.
Wall Street will be looking for updates regarding its automation efforts, like Autocado. CEO Brian Niccol told Yahoo Finance that the machine is close to deployment.
“We’re already on like our third or fourth prototype [of Autocado], and now we’re like okay, this is ready to go into a restaurant. I’m sure when we put it in the restaurant, we’ll learn something that might cause us to iterate one more time.”
Investors will also look for how the California Fast Act, which increased fast food wages to $20 per hour, impacted its business there. Analysts had agreed that Chipotle is among companies who have the brand power and fan base to adjust to the change.
“I think brands who provide a lot of value and have good traffic are best positioned,” said Peter Saleh of BTIG, who pointed out that Chipotle’s chicken bowl averages $9 across the country, compared to $12 to $13 for many burger meals.
“They’ve built quite a bit of momentum in their business with respect to traffic,” Citi analyst Jon Tower told Yahoo Finance.
In a note to clients, Sharon Zackfia of William Blair said about 14% of total Chipotle locations are in the Golden State, and suspects Chipotle raised prices about 7% in the state (including 8% to 10% on entrees) to cover incremental labor cost pressure.
Here’s what Wall Street expects from Chipotle, according to Bloomberg estimates:
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Revenue: $2.67 billion, up 12.9% from Q1 2023 ($2.37 billion)
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Adj. EPS: $11.66, up 11.1% from Q1 2023 ($10.50)
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Same-store sales growth: 5.13%
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Menu Price Increases: 2.87%
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Transactions growth: 3.03%
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Average check growth: 2.00%
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Digital Sales growth: 3.39%
In 2024, Chipotle said it expects to open between 285 to 315 new restaurants, assuming that “developer, permit, inspection, and utility delays do not worsen,” per the previous quarterly release.
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].
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