Chipotle's sales disappoint analysts despite a rise in revenue

 
Courtney Goldsmith
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Chipotle Becomes First Non-GMO US Restaurant Chain
Is guacamole going to cost even more extra? (Source: Getty)

Chipotle Mexican Grill's preliminary fourth quarter figures show sales are up, but its results will be lower than expected.

Sales revenue is anticipated to be $1.035bn (£849.7m), up from $997.5m the previous year, but below analyst estimates of $1.05bn.

The US-based Mexican food chain said comparable restaurant sales, or those that have been open for at least one year, are expected to fall 4.8 per cent compared with the same period the previous year.

After falling initially, Chipotle's shares increased more than four per cent in early trading.

Chipotle said its profits were hit by higher than forecasted spending on promotional materials and costs associated with testing television advertising. The unexpected rising cost of avocados for guacamole also cut into the company's earnings.

Comparable restaurant sales have been down for five straight quarters.

In its October trading update, Chipotle said expected comparable restaurant sales would fall in the low single-digits in the fourth quarter, but would grow in high single-digits in 2017.

The figures were down 20.2 per cent in October and 1.4 per cent in November, but they were up 14.7 per cent in December.

Fourth-quarter diluted earnings per share are expected to be in the range of $0.50 to $0.58, missing the average analyst estimate of $0.96 by a wide margin, according to Reuters.

Over the past few years, burrito shops like Chilango and Tortilla have boomed in London, but Chipotle's sales have been in the gutter since a number of food safety incidents, including two E.coli and two norovirus outbreaks at various locations in the US.

This caused comparative restaurant sales to drop 29.7 per cent in the first quarter, 23.6 per cent in the second and 21.9 in the third.

Read more: Wahaca has reopened all the London restaurants it shut over norovirus

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