More expensive burrito bowls and more orders on mobile devices helped Chipotle Mexican Grill to exceed expectations for earnings on Thursday despite the number of customers being less that entered its restaurants during its third quarter.
During a positive earnings call, Chipotle CEO Brian Niccol told listeners that the company was not providing a specific earnings forecast for the fourth quarter, but it already was seeing an increase in sales from the new marketing campaign that was launched in September.
In October, sales at same-stores have increased by 4%, said Chipotle attributing part of that gain to its “For Real” ad campaign.
For the just ended quarter, Chipotle posted earnings per share of $2.16 while analysts were expecting $2.00. Revenue came in at $1.23 billion which was in line with Wall Street and sales at same stores were 4.4% higher.
The new ad campaign highlights the burrito maker’s 51 ingredients and its tagline is “the only ingredient that is hard to pronounce at Chipotle, is Chipotle.”
This ad campaign will have TV ads running through November, while social media and online ads will run until the end of 2018.
Shares of Chipotle were back and forth during trading afterhours. Immediately after the release of earnings, shares fell over 2%, only to increases by up to 8%, as the report was analyzed by investors. Since January, Chipotle shares are up by over 46%.
Net income was up 3.1% to end the quarter at $38.2 million equal to $1.36 per share compared to $19.6 billion equal to 69 cents a share for the same period one year ago.
Excluding certain items, including moving the headquarters, Chipotle had per share earnings of $2.16 topping Wall Street’s estimate of $2.00.
Revenue for the quarter increased by 8.6%, helped by an increase in the menu price of 3.8% and new marketing campaigns that boosted sales during the three-month period, said the company. However, traffic fell by 1.1%.
The brand saw no lasting impact from an Ohio food safety outbreak earlier in its third quarter, said CFO John Hartung.
The company is expecting that sales at same stores for its full year will rise in the low to mid-single digits.
Online sales, a major initiative for CEO Niccol, expanded by 48.3% and now represent 11.2% of the overall sales at the burrito maker.