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Chipotle jumps on earnings beat as price hikes at the fast-casual chain help offset inflation pressures

Chipotle

Joe Raedle/Getty Images

  • Chipotle stock climbed 7% Wednesday following its Q4 earnings report. 
  • Adjusted earnings of $5.58 a share surpassed the $5.25 expected in a FactSet survey of analysts. 
  • The company dealt with pressure from higher costs for beef, beverages and freight. 

Chipotle stock climbed Wednesday after the Mexican food chain was able to pass price increases to its customers during the fourth quarter, helping offset pressures from higher food costs and deliver earnings that surpassed Wall Street’s target. 

The stock gained 7% to trade at $1,562 in premarket action. The shares this year through Tuesday had dropped by 16%. 

The move came after the company late Tuesday posted adjusted earnings of $5.58 a share, a 60% jump from a year ago and above the FactSet consensus estimate of $5.25 a share. Revenue rose 22% to $1.96 billion, in line with expectations. 

Chipotle was able to beat Wall Street’s earnings target in the face of higher costs for food, beverages and packaging. Those costs were 31.6% of the company’s total quarterly revenue, up 60 basis points compared with the year-earlier period. 

“The increase was due primarily to elevated inflation on beef and freight, and to a lesser extent, avocado costs that more than offset the leverage from menu price increases,” Chipotle said in its earnings report. 

Chipotle in December raised its menu prices by 4% and had raised prices during 2021 as it increased wages for employees. 

The company is likely to raise prices again this year as inflation persists, CEO Brian Niccol told The Wall Street Journal.

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