Despite persistent inflation and threat of rising beef prices, customers at Chipotle Mexican Grill won’t have to worry about paying more for a meal.
Chipotle CFO Jack Hartung told investors Tuesday that the fast-casual restaurant chain will not take a price increase just to boost comparable sales. Same-store or comparable sales are the difference in sales between sites that have been open in both of the comparison periods.
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“Right now, we know that there is some pressure on a few of our ingredients. Beef is the one that we keep hearing about. We haven’t seen it yet, but everyone is predicting that there’s going to be greater supply versus demand,” Hartung said on the company’s fourth quarter earnings call.
“But we’ll watch that carefully and see what inflation does, but it’s going to be more about inflation and wages inflation and ingredients. And do we need to take pricing action to cover some of that? But we wouldn’t take a price increase just to cover a comp lap,” Hartung continued.
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Data compiled by the Bureau of Labor Statistics shows the price of beef was down 3.1% in December 2022 from the same time in 2021, after breaking even in November and falling -0.8% in October.
CEO Brian Niccol added the Chiptole has made the decision not to go chasing people with discounts.
“That’s not what our brand is and that’s not what we’re going to do. We’re better off winning the value gain through great culinary, great speed/convenience, terrific customization.
Visits to Chipotle restaurants fell 10.2% in the fourth quarter, according to data from Placer.ai. McDonald’s visits rose 29.4% in the same period.
Even so, Chipotle continued to enjoy steady demand for its pricier menu items from its relatively wealthier customer base, Niccol said during the call with investors.
“We continue to see the higher-income consumer, the individual that earns over $100,000, coming more often,” Niccol said.
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On Tuesday, Chipotle reported 2022 full year revenue grew 14% to reach $8.6 billion, driven by an 8% increase in comparable sales. Digital sales represented 39% of sales.
Comparable sales for the fourth quarter ended December increased 5.6%. Analysts on average expected a 7.1% rise, according to Refinitiv IBES.
Based on January comparable restaurant sales growth in the low-double-digits, Chipotle anticipates first quarter comparable restaurant sales growth in the high-single-digits.
For the full year, Hartung said, “We’re running right now in that kind of 9% to 10% range.”
Net income for 2022 was $899.1 million, or $32.04 per diluted share, compared to net income of $653.0 million, or $22.90 per diluted share for 2021.
Adjusted diluted EPS was $32.78, representing 29% growth over last year after opening 236 new restaurants including 202 Chipotlanes.
The company plans to open 255 to 285 new restaurants in 2023.
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Reuters contributed to this report.