Posted: Jul 22, 2020
Chipotle’s digital sales soared 216% during the second quarter as more customers ordered their burritos online.
But the company’s net sales fell 4.8% from the year-earlier period.
Chipotle recently pledged to hire 10,000 new workers as digital orders drive sales growth.
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 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 a higher volume of third-party delivery orders 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. Overall, delivery orders rose 125% in the quarter. CFO Jack Hartung said the chain will start tweaking delivery prices to offset the commission fees charged by third-party delivery providers.
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%. About half of July sales have come from digital orders, even as the company reopened dining rooms.
By Amelia Lucas
July 22, 2020
Source and complete article: CNBC.com
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