Chipotle Shares Drop After Q3 Sales Miss Wall Street Estimates

Chipotle Mexican Grill, Inc. reported third-quarter revenue that missed Wall Street expectations, sending its shares down in after-hours trading.

The Denver-based burrito chain on Tuesday reported revenue of $2.2 billion, up 13.7% year-over-year, but below the $2.24 billion analysts had expected, according to Refinitiv. Chipotle also reported earnings per share of $8.68, above the $8.52 analysts had expected.

Comparable restaurant sales increased by 7.6% in the quarter, driven by a 5.6% increase in average restaurant sales and a 2% increase in transactions. Digital sales accounted for 36.1% of total sales in the quarter, up from 33.9% in the year-ago period.

The company’s profit margin declined in the quarter, hurt by higher labor and food costs. Chipotle said its restaurant-level operating margin was 15.5% in the quarter, down from 16.1% in the year-ago period. Chipotle also said it expects to open 235 to 250 new restaurants in 2023, down from its previous target of 250 to 285 new restaurants.

Chipotle shares fell 6.5% in after-hours trading following the release of the company’s earnings report.