An employee prepares a burrito bowl in a Chipotle Mexican Grill Inc. restaurant in Louisville, Kentucky.
Luke Sharrett | Bloomberg | Getty Images
Chipotle Mexican Grill reported quarterly adjusted earnings on Wednesday, down 90% year-over-year as dining halls closed down and reduced operating margins. However, many customers ordered online, and Chipotle's digital sales more than tripled in the second quarter.
The company's shares fell 1% in expanded trading.
Chipotle compared to Wall Street expectations using a Refinitiv analyst survey:
Earnings per share: 40 cents, adjusted for 35 cents. Revenue: $ 1.36 billion vs. $ 1.34 billion expected
The burrito chain reported net income of $ 8.2 million, or 29 cents per share, in the second quarter, compared to $ 91 million, or $ 3.28 per share in the same period in 2019. Operating margins declined 8 7% to 12.2% due to higher third-party delivery costs and temporary bumps in employee pay.
When the states closed dining rooms in the face of the coronavirus pandemic, Chipotle entered into new contracts with third parties. Grubhub and Uber Eats have helped attract new customers and drive order growth.
Customers also ordered more steak, bottled beverages, and burritos than usual, increasing the company's food, beverage, and packaging costs.
Excluding items, Chipotle earned 40 cents per share in the quarter, exceeding the analysts surveyed by Refinitiv, which is 35 cents per share.
Net sales decreased 4.8% to $ 1.36 billion, slightly exceeding expectations of $ 1.34 billion. Digital orders rose 216% and accounted for 60.7% of sales. The company has pledged to hire 10,000 new employees over the next few months as digital orders explode.
During the quarter, sales in the same store decreased 9.8%, but improved sequentially. After Chipotle fell 24.4% in April, sales in the same store decreased only 7% in May and turned positive in June. So far, sales in Chipotle restaurants that have been open for at least 13 months have increased 6.4% in July.
Executives said the chain's new Queso pulls more repeat orders than the previous iteration.
Despite the pandemic, Chipotle opened 37 new net restaurants in the quarter. Around 30 of its locations, mainly in shopping centers or malls, are temporarily closed.
The company, which had its outlook for fiscal year 2020 in April, did not provide an updated forecast and referred to the uncertain effects of Covid-19 on the US economy.
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