By Neil J Kanatt
April 29 (Reuters) – Chipotle Mexican Grill posted a surprise rise in first-quarter sales on Wednesday as the burrito chain’s efforts to refresh its menu with protein-rich entrees and snacks helped drive demand.
Shares of the company were up about 6% in extended trading.
Consumer preferences have shifted toward protein-packed meals and healthier, less-processed food options, benefiting the restaurant chain known for its burrito bowls and salads, even as macroeconomic uncertainty pressures spending, especially among lower-income households.
The company reported a 0.5% rise in quarterly comparable sales, compared with analysts’ expectations for a 0.8% decline, according to data compiled by LSEG.
Chipotle, which announced in February it would increase menu prices by 1% to 2% this year to offset higher raw material costs, has gained traction through menu innovation, affordable Tex-Mex offerings and enhanced marketing efforts.
Prices of beef, Chipotle’s biggest commodity, hit a record high recently as cattle supplies fell after persistent droughts drove ranchers to send more animals to slaughter, instead of keeping them for breeding.
On an adjusted basis, the company reported a profit of 24 cents per share for the quarter, in line with analysts’ estimates.
The company’s “Recipe for Growth”, aimed at reversing sluggish demand by improving operations, boosting marketing and refreshing its menu, has helped lift foot traffic, with overall visits rising 5.8%, data from Placer.ai showed.
The data research firm also said the Chicken al Pastor dish that Chipotle reintroduced earlier this year has been the single biggest driver of consumer traffic at Chipotle recently.
Smaller, cheaper additions, such as a $3.50 single taco with 15 grams of protein and a $3.80 high-protein cup, are resonating with cost-conscious diners and those seeking smaller portions amid growing adoption of weight-loss drugs, said Michael Gunther, analyst at Consumer Edge.
Chipotle’s results mirror rival Yum Brands’, whose cheaper meal options drove demand at the Taco Bell and KFC chains, aiding a quarterly results beat earlier on Wednesday.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Tasim Zahid)
