Chipotle’s new prime government obtained some respiration room to overtake the burrito big.
Chipotle Mexican Grill Inc. reported first-quarter same-store gross sales on Wednesday that topped analysts’ projections, simply seven weeks after Taco Bell’s former chief government officer, Brian Niccol, took the helm. The outcomes despatched the shares up as a lot as 11 p.c in late buying and selling in New York.
The chain announced a change to its administration final yr — longtime chief and founder Steve Ells would step down as CEO, although stay chairman. Now buyers are tuned in to how Niccol plans to reverse a extended droop following E. coli and norovirus outbreaks, together with a variety of different points together with a hacker assault.
“While the company made notable progress during the quarter, I firmly believe we can accelerate that progress,” Niccol stated in a statement. “This path to performance will be grounded in a strategy of executing the fundamentals while introducing consumer-meaningful innovation.”
Same-store gross sales, a intently watched measure, climbed 2.2 p.c within the first quarter. Analysts estimated a rise of 1.three p.c, in response to Consensus Metrix. The firm reiterated its steerage for low-single-digit progress in comparable gross sales for this yr.
Chipotle inventory rose as excessive as $375.79 in after-hours buying and selling in New York. The shares had already gained 17 p.c this yr via Wednesday’s shut.
Results had been helped by larger common verify at Chipotle’s eating places, which included the advantage of menu worth will increase taken throughout the previous yr, the corporate stated. Revenue was $1.15 billion, matching projections.
The firm’s board additionally authorised spending as much as $100 million for share buybacks. Management expects to open 130 to 150 new eating places this yr.
While the outcomes are constructive, Will Slabaugh, an analyst at Stephens Inc. stated he stays involved about site visitors traits on the chain. Before Niccol’s arrival, Chipotle tried to deliver again prospects with an ad campaign that includes a member of the Wu-Tang Clan, in addition to with reductions, new meals and an improved cellular app. Those measures have seen restricted success, so Wall Street is raring to see the brand new strategy.
“While we view the recent hire of Brian Niccol as a positive for the company’s turnaround efforts, we believe meaningful changes/initiatives could be multiple quarters away,” Slabaugh stated in a be aware after the corporate launched outcomes.
On a convention name, Niccol stated he would think about including drive-thrus and franchising shops, together with heavier menu testing — choices Chipotle hasn’t leaned on up to now.
Niccol can also look to extra menu improvements. At Taco Bell, a chain identified for indulgent objects and new fare supplied just for a sure time, he noticed success courting prospects with Doritos Locos Tacos and nacho fries. Chipotle has just lately tried promoting frozen margaritas, quinoa and salads with an avocado-citrus dressing.
Last month, the corporate added one other Taco Bell veteran, Chris Brandt, to steer its advertising and marketing efforts. He is accountable for restoring the chain’s picture following the sickness outbreaks, and different hiccups together with the information breach. Analysts have stated the two,400-location chain could must spend extra on conventional promoting to deliver prospects again.