Following another food safety scare that closed a Virginia restaurant in the second quarter and the lukewarm consumer response to the introduction of queso to the menu, Chipotle Mexican Grill Inc. fell short of Wall Street’s third quarter expectations. Though comparable sales showed increases of 1 percent, they did not meet the 1.2 percent anticipated by investors. Shares fell by close to 6 percent in after-hours trading.
Chipotle’s net income increased to 16.9 million, or $0.69 per share, over $7.8 million, or $0.27 per share last year. Chipotle’s revenue also increased 8.8 percent to $1.13 billion. Yearly net income reached $132.5 million, which included the after-tax impact of the estimated $18.2 million the brand was charged after April’s data breach. This was an increase from $7.0 million. The brand also reported that it felt approximately $0.13 of impacts from Hurricanes Harvey and Irma.
For the year, revenue increased 17.3 percent to $3.37 billion, and comparable restaurant sales increased by 8.3 percent.
The brand also reports that operating margin increased to 16.1 percent from 14.1 for the quarter and to 17.6 percent from 12.5 percent for the year.
The brand still expects restaurant sales to increase by 6.5 percent for the year, which is consistent with expectations. Plans to open between 195 and 210 new stores in 2017 are still on track, though the brand expects to fall in the lower range. Another 130 to 150 new store openings are expected in 2018.
“We continued to make important progress to improve the guest experience at our restaurants during the quarter,” said Steve Ells, founder, chairman and CEO of Chipotle, in a press release. “Our strategic initiatives in operations, innovating our digital sales platform, new menu introductions, and marketing the brand are starting to take hold. Despite several unusual impacts during the quarter, including the impact of hurricanes, we maintained our focus and saw some encouraging signs. Our leadership remains focused on setting the foundation for future growth, and we are confident in our teams’ ability to deliver against those plans.”