Inflation: Chipotle CEO says some consumers are being priced out
Chipotle's inflation-driven price increases may be freezing some out of the market for a burrito or burrito bowl.
"We continue to see a widening of trends by income level with the lower-income consumer further reducing frequency," Chipotle CEO Brian Niccol said on a late Tuesday earnings call.
Chipotle last raised prices by a mid-to-high single-digit percentage in August to help offset higher costs for wages and food inputs. The company raised prices by about 4% in the first quarter as well.
"While it is difficult to predict the macroeconomic impact on future spending trends," Niccol added, "we know our value proposition remains strong and we experienced minimal resistance to our price increase in the quarter."
Fortunately for Chipotle, the burrito chain caters increasingly to a higher income consumer that is able to absorb the chain's price hikes. In turn, that is allowing Chipotle to continue to deliver strong quarterly sales and profits.
Here is how Chipotle performed compared to Wall Street estimates in the third quarter.
Revenue: $2.2 billion versus $2.24 billion expected
Adjusted EPS: $9.51 versus $9.23 expected
Same-store sales: 7.6% versus 7.38% expected
Chipotle CFO Jack Hartung added on the earnings call that Chipotle's same-stores in October are trending up by a mid-single digit percentage.
The company expects same-store sales to rise by a mid to high single digit percentage for the fourth quarter, supported by its recent price hikes and the release of the new garlic steak.
Chipotle stock was basically unchanged in premarket trading.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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