Chipotle Mexican Grill Inc. said Tuesday that same-store sales rose 1 percent in the third quarter ended Sept. 30, but earnings disappointed Wall Street expectations.
Quarterly revenue increased 8.8 percent to $1.13 billion, and net income more than doubled to $19.6 million, or 69 cents per share, from a year earlier.
But both numbers were below analysts’ expectations, according to information from the website Earnings Whispers, and the stock fell sharply in after-hours trading.
Chipotle said that its profits were impacted by an $18.2 million, after-tax liability from a data-security incident announced in April. The company also said earnings were hurt by hurricanes Harvey and Irma. Executives on the company’s earnings call Tuesday said the hurricanes hurt same-store sales by 50 basis points.
Management also said that it expects same-store sales for the full year to rise about 6.5 percent. That’s seemingly down from a previous projection in the high single digits.
On the call, executives said that same-store sales improved in September after the company’s introduction of queso — which has become an add-on item for 15 percent of its customers.
They said same-store sales continued to show improvement in the first few weeks of the fourth quarter, with same-store sales up 2 percent to 3 percent in October.
“We had to suffer through several negative weeks during the quarter,” CFO Jack Hartung said on the call. “I don’t know we’d call ourselves enthusiastic about overall sales trends. But we did change the trend line.”
The 1-percent increase in same-store sales represents a significant slowdown from earlier in the year, as the company moved further from a series of food safety incidents that hurt sales in 2016.
Same-store sales increased 17.8 percent in the first quarter and 8.1 percent in the second. But a summertime norovirus incident at a restaurant in Virginia reminded customers of those previous problems, and the company received mixed reviews for its long-awaited queso that debuted in September.
On a two-year, stacked basis, Chipotle’s same-store sales in the third quarter were down 20.9 percent.
Contact Jonathan Maze at [email protected]
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Update, Oct. 24, 2017: This story has been updated to include comments from the earnings call.