Chipotle Mexican Grill reports profitable Q1 2021 results, beats Wall Street’s estimates

Chipotle Mexican Grill on Wednesday released the results of its first-quarter earnings. The company’s recent gains are from its online orders which beat its restaurant orders for the first time in years.

Shares of Chipotle were up less than 1% in extended trading on Wednesday.

Chipotle’s Q1 2021 earnings beat Wall Street’s estimates. It is set to challenge the results from the same period a year ago in the next quarter, which means that same-store sales growth is expected to jump as much as 30%.

Here’s how the company performed in the quarter:

• Net income: $127.1 million, or $4.45 per share, up from $76.4 million, or $2.70, a year ago

• Earnings per share: $5.36 adjusted, vs. Refinitiv analysts’ $4.89

• Revenue: $1.74 billion, vs Refinitiv analysts’ $1.74 billion

The restaurant chain would have reported better results if not for costs related to corporate restructuring, asset impairment and closures, and the impact of Covid-19 on the business, which all beat down the earnings by 91 cents per share. However, Chipotle still topped analysts' estimate of $4.89 per share and earned $5.36 per share.

Revenue rose 23.4% to $1.74 billion, which met analysts’ expectations. Same-store sales rose 17.2% compared with the same period a year ago. Chipotle attributed its first-quarter earnings to increased online orders, new menu items, and government stimulus which increased consumer’s spending power during the pandemic. The restaurant chain also introduced its cauliflower rice, and digital exclusive quesadillas, at an extra cost.

According to CEO Brian Niccol, at least 1 out of 10 customers ordered the quesadillas, which helped the company reach its highest number of new customers in March. He said that customers have embraced the quesadillas, and he suspects that the March launch may have caused Chipotle’s digital sales to double. Online orders account for 50.1% of total sales for the quarter.

“As vaccines roll out and we get closer to moving past this pandemic, I believe Chipotle is well-positioned for growth,” Niccol said. “I’m excited about our future as we remain focused on innovating in culinary, leading in food with integrity, and proving convenient access inside our restaurants and through our expanding digital ecosystem.”

Chipotle CFO Jack Hartung said digital pickup orders are more effective and profitable for the business, when compared with in-person orders. He said the company raised delivery process by 4% in early April to offset the higher delivery cost. In the fourth quarter, Chipotle increased menu prices for delivery orders by 13% on average.

“We haven’t seen a large amount of resistance from that, so I think that customers understand that a premium convenience experience has a premium cost associated with it,” said Curt Garner, Chipotle Chief Technology Officer, in an interview.

The company says it will not provide a sales growth outlook for the rest of the year, considering unseen circumstances that could arise, like the 2020 pandemic. However, it said it has plans to open 200 new locations this year, and several market tests for a new menu it is developing.