Chipotle Profit Misses as Sales Growth Slows

Chipotle Mexican Grill Inc.'s sales growth continued to slow in the third quarter, as the company also reported weaker-than-expected profit.

Sales at restaurants open more than 12 months grew 2.6%, edging in above the 2.4% increase analysts had expected, according to FactSet data.

But growth in the metric slowed significantly from the 19.8% growth that it posted in the same period a year ago and the 4.3% rise in second quarter.

Chipotle was once one of only a handful of alternatives to fast food for those eating on the go, but it is now facing competition from a throng of chains seeking to emulate its success.

The restaurant chain is also facing problems that weigh on many big, mature brands, including slower sales growth, difficulty attracting workers, problems securing ingredients, and attacks from critics who target its self-proclaimed virtuousness.

Chipotle has warned that it expects its same-store sales growth in 2015 to slow to a single-digit percentage from nearly 17% last year. On Tuesday, Chipotle said it expects its 2016 same-store sales to also grow in the low single digits.

For the period ended Sept. 30, Chipotle reported earnings of $144.9 million, or $4.59 a share, up from $130.8 million, or $4.15 a share, a year earlier.

Revenue grew 12% to $1.22 billion, helped by an increase in customer visits and menu price increases.

Analysts polled by Thomson Reuters had forecast $4.62 a share in earnings on $1.22 billion in revenue.

Food costs were 33% of revenue in the quarter, down from 34.3% a year ago, helped by increased menu prices and relief in dairy and avocado prices.

Restaurant operating margin fell by 0.5 percentage points to 28.3%, weighed by higher labor costs and higher marketing and promotion expenses.

Shares of Chipotle fell 0.9% in after-hours trading.

By Chelsey Dulaney