Chipotle (CMG) is expected to post its first-quarter 2022 earnings report Tuesday after market close as both Wall Street and Main Street alike keep a close eye on food and labor inflation, in addition to digital sales.
Here’s what Wall Street expects from the California-based company, according to Bloomberg consensus estimates:
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Revenue: $2.01 billion expected
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Adj. earnings per share (EPS): $5.67 expected
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U.S. same-store sales: 7.86% expected
Analysts expect that the company’s latest quarterly results, which ended March 31, 2022, will address additional menu pricing.
Nick Seytan of Wedbush anticipates higher costs from disruptions in avocado supplies as well as “additional inflationary pressures stemming from the situation in Ukraine” that “remain a risk.” Wedbush has an Outperform rating on shares of Chipotle, with a price target of $2,000.
“While CMG is not immune to incremental food cost inflation, we believe it remains relatively well positioned to offset the incremental inflation with price increases remains relatively well positioned to offset the incremental inflation with price increases,” said a Wedbush note to investors.
In Chipotle’s fourth-quarter results, the company cited commodity inflation taking a toll, with food, beverage and packing costs accounting for 31.6% of total revenue, an increase of 60 basis points, compared to Q4 of 2020. The report cited the spike was primarily from inflation on beef and freight and to “a lesser extent” avocado costs that “more than offset” the leverage from menu price increases.
In June 2021, the company announced a rise in menu prices to offset the costs of raising the hourly minimum wage to $15. The company announced menu price increases again in December 2021.
Investors are also keeping a close eye on one of the company’s digital innovations, Chipotlane Digital Kitchen, that offers drive-through and walk-up windows for digital order pickup.
According to R.J. Hottovy, head of Analytical Research at the data intelligence platform Placer.ai, Chipotle remains one of the top performers in the fast casual category in 2022, “with visits running at a mid-teens clip versus pre-pandemic levels.”
During the week of January 3rd, 2022 foot traffic at Chipotle locations increased 14.7% compared to the same week in 2019, and reached as high as 24.2% the week of February 28, 2022. Upon the launch of the pollo asado, foot traffic was up roughly 19.5% during the week of March 14.
Hottovy believes Chipotle’s heightened foot traffic is heavily influenced by digital ordering enhancements like the Chipotlane pick-up windows “where visitations have outpaced the rest of the chain.”
Tracking foot traffic among the 75 Chipotlanes that opened between 2019 and 2020, Placer.ai noted a spike of 40.7% increase in traffic for the week of January 3, 2022 compared to 2021 levels.
Shares of Chipotle are down roughly 2.66% compared to a year ago.
Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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