LOS ANGELES (Reuters) – Chipotle Mexican Grill Inc (CMG.N) on Wednesday reported sales at established eating places and revenue for the primary quarter that beat expectations, and new Chief Executive Brian Niccol advised traders that the beleaguered burrito chain has begun its turnaround.
Chipotle shares jumped 10.5 p.c in after-hours buying and selling.
Chipotle is “clearly a recovery story in the U.S.,” Niccol mentioned in his first convention name with analysts and traders, after taking up as CEO on March 5.
Wall Street is hungry to be taught particulars of Niccol’s technique for placing Chipotle’s sales stoop from meals security lapses behind it and including aptitude to a menu that has grown drained.
Niccol, the previous chief of Yum Brands Inc’s (YUM.N) Taco Bell, is understood for launching sizzling new menu objects, similar to $1 Nacho Fries shortly earlier than he made the leap to Chipotle.
Sales at Chipotle eating places open a least 13 months rose a better-than-expected 2.2 p.c within the first quarter, with menu worth will increase once more offsetting declines in buyer visits.
Net revenue jumped nearly 29 p.c to $59.four million, or $2.13 per share, handily beating analysts’ common estimate of $1.57 per share, in keeping with Thomson Reuters I/B/E/S.
Chipotle has struggled since outbreaks of E.coli, salmonella and norovirus that have been linked to the chain in 2015, and regardless of thousands and thousands of in free meals giveaways it didn’t win again diners.
Niccol mentioned “Mission One” is to make the model extra seen with messages that remind diners what makes the chain completely different.
He introduced in a Taco Bell alum to switch long-time Chipotle advertising chief Mark Crumpacker. And the chain has additionally already made some “simple pivots” on messaging – releasing punchy and light-hearted advertisements specializing in Chipotle’s “real” elements similar to grilled adobo hen, freshly made chips and hand-mashed guacamole.
On the operational facet, Chipotle set new objectives for reducing meals and packaging waste and linked government compensation to sales and margin development at eating places.
Other alternatives embrace including new meal events – extra possible late-night than breakfast within the close to time period – tweaking menus to broaden attraction, and rising entry by means of supply, catering and cellular ordering, Niccol mentioned.
Selling the chain’s 2,441 eating places, one thing some traders advocate, shouldn’t be on the desk.
“We see no need to go down that path right now,” Niccol mentioned.
Chipotle shares are up about 35 p.c since Feb. 13, when the corporate introduced Niccol’s rent. They are buying and selling at a price-to-earnings ratio of 54, greater than double that of McDonald’s Corp (MCD.N) and Starbucks Corp (SBUX.O), in keeping with Thomson Reuters knowledge.
The 10.5 p.c bounce in Chipotle shares in prolonged buying and selling on Wednesday introduced them to $373.50. Still, they continue to be far under their all-time excessive of greater than $742 in the summertime of 2015, simply months earlier than information of the meals poisoning outbreaks that sickened a whole lot of U.S. prospects and unmasked operational weaknesses on the former high-flying chain.
Reporting by Lisa Baertlein in Los Angeles; Editing by Leslie Adler