Chipotle’s marketing, online push drive profit beat; shares jump 10 percent

(Reuters) – Chipotle Mexican Grill Inc topped Wall Street estimates for quarterly earnings as it lured diners with aggressive marketing and online orders spiked, sending its shares up 10 percent in after-hours trading on Wednesday.

FILE PHOTO: The logo of Chipotle Mexican Grill is seen at a restaurant in Paris, March 7, 2016. REUTERS/Charles Platiau/File Photo

A marketing campaign aimed at reviving the Mexican-inspired burrito chain’s image after a series of food-safety lapses in 2015 is helping the company win customers back.

The campaign, called “For Real,” was run both on social media and at restaurants, highlighting the fresh ingredients in Chipotle tacos and burritos that “everyone can both recognize and pronounce.”

Chipotle also announced that it would spend $100 million to buy back shares.

Online orders surged as Chipotle teamed up with food delivery services Doordash and Postmates, driving its “digital sales” up 65 percent in the final quarter of 2018. These sales had risen about 50 percent in the previous quarter.

Chipotle’s focus on marketing and food-delivery has been championed by Chief Executive Officer Brian Niccol, who has now finished one year at the helm.

The company reported that sales at outlets open for at least 13 months jumped 6.1 percent in the three months ended December, much better than Wall Street analysts’ average forecast of a 4.49 percent increase, according to IBES Refinitiv data.

The burrito chain projected that these sales would rise in the mid-single percentage digits through 2019, and that they were improving mainly due to stronger traffic at restaurants and a higher average check boosted by menu price increases.

“The growth acceleration this quarter gives us confidence that our strategy is working,” Niccol said in a statement.

Despite higher marketing and wage costs, Chipotle’s restaurant operating margins rose to 17 percent from 14.9 percent a year earlier, the company said, mainly due to higher sales.

Excluding one-time charges, the company reported earnings of $1.72 per share, topping analysts’ estimates of $1.37.

Revenue overall rose 10.4 percent to $1.23 billion.

Reporting by Nivedita Balu in Bengaluru; Editing by Sai Sachin Ravikumar

Source link

Leave a Reply