An employee prepares a burrito bowl at a Chipotle Mexican Grill Inc. restaurant in Louisville, Kentucky.
Luke Sharrett | Bloomberg | Getty Images
Chipotle Mexican Grill on Wednesday reported quarterly adjusted earnings that were down 90% from the year-ago period as dining room closures hit business and dented operating margins. But many customers moved to order online, with Chipotle’s digital sales more than tripling during the second quarter.
Shares of the company fell 1% in extended trading.
Here’s what Chipotle reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: 40 cents, adjusted, vs. 35 cents expected
- Revenue: $1.36 billion vs. $1.34 billion expected
The burrito chain reported fiscal second-quarter net income of $8.2 million, or 29 cents per share, down from $91 million, or $3.28 per share, during the same period in 2019. Operating margins fell 8.7% to 12.2% during the quarter, weighed down by higher third-party delivery expenses and temporary bumps to worker pay.
As states shuttered dining rooms in light of the coronavirus pandemic, Chipotle struck new deals with third-party delivery providers. Grubhub and Uber Eats helped bring in new customers and drive order growth.
Customers also ordered more steak, bottled beverages and burritos than usual, raising the company’s costs for food, beverage and packaging.
Excluding items, Chipotle earned 40 cents per share during the quarter, topping the 35 cents per share expected by analysts surveyed by Refinitiv.
Net sales dropped 4.8% to $1.36 billion, narrowly beating expectations of $1.34 billion. Digital orders increased by 216% and accounted for 60.7% of sales. The company has pledged to hire 10,000 new workers over the next several months as digital orders explode.
During the quarter, same-store sales fell 9.8% but improved sequentially. After plunging 24.4% in April, Chipotle’s same-store sales were down just 7% in May and turned positive in June. So far in July, sales at Chipotle restaurants that have been open at least 13 months have grown 6.4%.
Executives said that the chain’s new queso is drawing more repeat orders than the previous iteration.
Despite the pandemic, Chipotle opened 37 net new restaurants during the quarter. Roughly 30 of its locations, mostly those inside malls or shopping centers, remain temporarily shuttered.
The company, which pulled its fiscal 2020 outlook in April, did not provide an updated forecast, citing the uncertain impact of Covid-19 on the U.S. economy.
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