Chipotle Sales Rise 14%, But Are Disappointing

Chipotle Mexican Grill Inc. reported another disappointing revenue increase, raising additional concerns about the restaurant chain's growth prospects.

Sales rose 14% to $1.2 billion, but fell short of the average analyst estimate of $1.22 billion, or 16% growth. Sales at restaurants opened more than 13 months increased 4.3%, less than analyst estimates of about 6%.

The company's share price, which fell more than $50 each after the previous earnings report, dropped 6% to $633 in after-hours trading. Momentum had been building in the stock, which has gained about 12% this month.

Chipotle had been a highflying restaurant chain, securing customers attracted to the restaurant's locally sourced food. However, disappointing sales growth in the first quarter and tougher year-to-year comparisons in 2015 raised concerns among investors.

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Chipotle warned in October that sales growth would slow to the single digits in 2015 from double-digit gains in recent periods.

Overall, Chipotle reported earnings of $140.2 million, or $4.45 a share, up from $110.3 million, or $3.50 a share, a year earlier.

Food costs were 33.1% of revenue, a decrease of 1.5 percentage points, as a result of the impact of increased menu prices, as well as relief in dairy and avocado prices. Those results were partially offset by increased beef and packaging costs, as compared with the previous year.

The company opened 48 restaurants during the quarter, bringing its total to 1,878.

(By Neil Haggerty)