Chipotle Mexican Grill Inc. Reports Disappointing 4th Quarter Earnings
By Chipotle Mexican Grill Inc. (NYSE:CMG) released its fourth-quarter earnings report on Wednesday, disappointing both analysts and investors alike.[0] The burrito chain reported total revenue of $2.2bn, an increase of 11.2% compared to the same period in 2021.[1] Comparable restaurant sales increased 5.6% year-over-year, while earnings per share were slightly lower than expected at $8.29 per share.[2]
Excluding certain legal expenses, corporate restructuring costs and other items, Chipotle earned $8.29 per share, compared to $5.58 a share in the prior-year quarter.[3] Per a survey conducted by FactSet, analysts anticipated adjusted earnings per share of $8.91, in addition to revenue of $2.23 billion.[4] It was anticipated that same-store sales would increase by 6.9%.[4]
Chipotle's same-store sales experienced an 8% increase over the entire year.[5] Revenues rose to $8.6 billion, a 14.4% increase, while net income came in at $899 million, equating to $32.04 per share, compared to $652.9 million and $22.90 per share from the prior year.[6] In-restaurant sales increased 26.4% for the year ended December 31, 2022, as compared to the year ended December 31, 2021, while digital sales represented 39.4% of total food and beverage revenue.[2]
Restaurant level operating margin was up 24% from this time last year—20.2%.[7] Sales leverage was the main factor that led to the improvement, while lower delivery fees resulting from fewer delivery transactions had a smaller effect. This progress was partly negated by higher food costs and wage inflation.[8] Food, beverage and packaging costs in the fourth quarter were 29% of total revenue, a decrease of 230 basis points compared to the fourth quarter of 2021.[2]
Chipotle Mexican Grill’s shares fell 5% in after-hours trading after the burrito restaurant chain reported fourth-quarter adjusted earnings, revenue, and same-store sales that fell short of Wall Street’s expectations.[9]
Last year, the company opened 236 additional restaurants, bringing the total number of restaurants they operate up to 3,187.[6] Many of the new restaurants featured Chipotlanes, a drive-thru lane designated solely for orders placed on the mobile app.[10]
Investors are willing to give Chipotle credit for the latest growth, but the fast-casual restaurant chain's valuation is still quite high.[11]
0. “Chipotle Missed Its Earnings, Here's Why It's Still A Buy (NYSE:CMG)” Seeking Alpha, 8 Feb. 2023, https://seekingalpha.com/article/4576451-chipotle-missed-its-earnings-heres-why-its-still-a-buy
1. “Chipotle reports 11.2% revenue increase in Q4 2022” Verdict Foodservice, 8 Feb. 2023, https://www.verdictfoodservice.com/news/chipotle-reports-revenue-increase-q4/
2. “Chipotle stock loses its spice as 4Q earnings disappoint” Proactive Investors USA, 8 Feb. 2023, https://www.proactiveinvestors.com/companies/news/1005607/chipotle-stock-loses-its-spice-as-4q-earnings-disappoint-1005607.html
3. “Chipotle Mexican Grill Misses Expectations for Earnings, Revenue and Same-Store Sales” NBC 6 South Florida, 7 Feb. 2023, https://www.nbcmiami.com/news/business/money-report/chipotle-mexican-grill-misses-expectations-for-earnings-revenue-and-same-store-sales/2968210/
4. “Chipotle stock falls after ‘tightening' consumer spending leads to second earnings miss in 5 years” MarketWatch, 7 Feb. 2023, https://www.marketwatch.com/story/chipotle-stock-falls-after-tightening-consumer-spending-leads-to-second-earnings-miss-in-five-years-11675805754
5. “Chipotle to test a robotic makeline and new grills” Restaurant Business Online, 8 Feb. 2023, https://www.restaurantbusinessonline.com/operations/chipotle-test-robotic-makeline-new-grills
6. “Chipotle sees 15% drop in delivery orders amid prices hikes” Business Insider, 7 Feb. 2023, https://www.businessinsider.com/chipotle-sees-drop-in-delivery-orders-amid-prices-hikes-2023-2
7. “Chipotle Slumps After Disappointing on Sales, Key Profit Margin” Bloomberg, 7 Feb. 2023, https://www.bloomberg.com/news/articles/2023-02-07/chipotle-slumps-as-rising-expenses-erode-profitability
8. “Chipotle's Q4 2022 earnings preview: Here's what to expect” Yahoo News, 7 Feb. 2023, https://news.yahoo.com/chipotles-q4-2022-earnings-preview-heres-what-to-expect-150339797.html
9. “Chipotle Stock Falls After Earnings Disappointed” Barron's, 8 Feb. 2023, https://www.barrons.com/articles/chipotle-earnings-stock-price-51675811556
10. “Chipotle Stock: Time to Sell Some Shares?” The Motley Fool, 8 Feb. 2023, https://www.fool.com/investing/2023/02/08/chipotle-stock-time-to-sell-some-shares
11. “Chipotle's Valuation Does Not” GuruFocus.com, 8 Feb. 2023, https://www.gurufocus.com/news/1945873/chipotles-valuation-does-not-make-sense
