Chipotle Beat Analysts’ Expectations in Q1



Chipotle’s earnings

Chipotle Mexican Grill (CMG) reported its first-quarter results on April 24 after the market closed. For the quarter ending on March 31, the company posted an adjusted EPS of $3.40 on revenues of $1.31 billion. Chipotle outperformed analysts’ EPS expectation of $3.01 and revenue estimate of $1.27 billion. The company’s SSSG (same-store sales growth) rose to 9.9%, which beat analysts’ expectation of 7.3%. The growth in the transaction of 5.8% and a favorable mix of 2.0% drove the company’s SSSG during the quarter. Chipotle’s deferred revenues from its loyalty program had a negative impact on its SSSG by 0.3%.

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Revenue growth

Chipotle’s revenues rose 14.0% YoY (year-over-year). The positive SSSG of 9.9% and the net addition of 107 restaurants in the last four quarters drove the company’s revenues during the quarter. Compared to the first quarter of 2018, Chipotle’s digital sales rose 100.7% to form 15.7% of the company’s total revenues. The company launched its loyalty program across the nation in March. The program crossed the million-membership mark within one week of the launch. During the earnings call, Chipotle’s management announced that the company’s loyalty program has ~3 million members.

EPS growth

For the quarter, Chipotle posted an EPS of $3.13. However, removing one-time items, the company’s adjusted EPS was $3.40, which represents a rise of 59.6% from $2.13 in the first quarter of 2018. The revenue growth, expanded EBIT margin, lower effective tax rate, and share repurchases drove the company’s EPS. During the quarter, Chipotle’s EBIT margin improved from 8.1% in the first quarter of 2018 to 8.9%. Increased menu prices at the end of 2018, sales leverage from positive SSSG, and lower repair and maintenance expenses drove the company’s EBIT margin. The increase was partially offset by higher general and administrative expenses.

For the quarter, Chipotle’s effective tax rate was 22.2%—compared to 36.9% in the first quarter of 2018. The company’s effective tax rate fell due to unfavorable discrete tax items in the first quarter of last year.


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