By Emiliana Molina
Shares of Chipotle Mexican Grill Inc. plummeted by more than 5 percent Wednesday after reporting earnings that rose 11 percent in the third quarter, but fell short of analysts’ estimates.
The company said it’s spending more to hire “top performing” employees and to continue to expand the number of stores. The Mexican grill’s shares closed at $665.67 Wednesday, down $39.96.
The Denver-based fast food restaurant said net earnings in the quarter ended Sept. 30 rose to $144.9 million, or $4.59 per diluted share, from $130.8 million, or $4.15 per diluted share in the same quarter a year ago. Analysts surveyed by Bloomberg had expected earnings of $4.62.
In addition, Chipotle said sales at stores open for more than 13 months, up 2.6 percent in the quarter, would have a similar low- to mid-single-digit increase next year.
“A 2016 outlook calling for comps in the low-single-digit range admittedly raise some concerns,” said R.J Hottovy, chief financial analyst at Morningstar.
Nevertheless, he said restaurant traffic has turned negative across much of the fast food restaurant industry.
The company plans to open between 215 to 225 new restaurants in 2015, a number slightly higher than the previously announced range of 190 to 205 restaurants for the year.
Revenue increased by 12.2 percent to $1.22 billion from $1.08 billion in the year ago period, in line with analysts’ expectations.
Although the chain has opened 150 new restaurants this year, 53 of which were opened in the third quarter, sales have not been consistent.
Jack Hartung, chief financial officer, said in a conference call Tuesday that traffic during the month of October has been “very choppy.”
Newly appointed Chief Information Officer Curt Garner, formerly in the same position at Starbucks, was hired to help guide the brand in providing the best restaurant experience possible in a fast food chain.
Take-out orders through mobile apps have also become a growing part of the company, said Monty Moran, co-chief executive officer, in the conference call with analysts late Tuesday. This has become a “second make-line” of the main restaurants and is bringing in “at least $500 a day in sales per restaurant.”
In high-volume restaurants, Moran said take-out orders have become a second restaurant within the restaurant.