Chipotle (CMG) is going to let consumers digest its latest spate of price increases before cooking up any more in 2023.
"We don't have any plans to dial the menu price increases back, but we don't have any plans to raise prices either," Chipotle CFO Jack Hartung said on Yahoo Finance Live (video above).
Hartung's call on prices came after Chipotle felt some pushback from lower- and middle-income consumers in the fourth quarter. Same-store sales growth clocked in at 5.6%, cooling from a more than 7% growth rate in the third quarter as customer traffic softened. The sales result also missed analyst estimates.
Chipotle raised menu pricing by about 4% in August 2022 amid rising costs for labor and ingredients. The company also lifted prices an additional 2% to 3% in 700 restaurants where wages were soaring.
Here is how Chipotle performed compared to Wall Street estimates:
Net Sales: $2.2 billion vs. $2.23 billion
Adjusted EPS: $8.29 vs. $8.91 per share
Same-Store Sales: +5.6% vs. 7.04%
Fortunately for Chipotle, the higher menu prices haven't led to persistent traffic weakness in 2023.
The company said same-store sales in January were up by a low double-digit percentage. For the first quarter, Chipotle guided to a high single-digit percentage same-store sales gain.
Chipotle stock still fell 5% in Wednesday trading despite the sales trend improvement and Wall Street analysts defending shares of the fast-casual food chain.
"A stock that is up 22% year to date is always subject to extra scrutiny into earnings, as bull and bears look for data points to validate the thesis," Bernstein analyst Danilo Gargiulo wrote in a client note. "We do not believe that Chipotle's 4Q22 results are a needle mover. The three main controversies on the stock (traffic improvement, restaurant level margins recovery and sustainability of unit growth) missed expectations but offered reasons for long-term optimism."
The analyst maintained an Outperform rating on Chipotle.