Chipotle (CMG) expects Americans to keep shelling out for steak bowls and chicken quesadillas even as overall spending slows down.
"When consumers are under pressure, if we're executing at a high level, customers tend to keep Chipotle in their budget longer" than other items, CFO Jack Hartung told Yahoo Finance.
In the first quarter, US GDP expanded at a 1.6% annualized pace, a slower pace than the Street had expected. But Hartung, whose company just posted a stellar Q1 earnings report, said the health of its consumers has been "so far, so good," despite macro headwinds.
For Chipotle's Q1, revenue grew 14.1% to $2.7 billion, with same-store sales jumping by 7%. The company also beat expectations on the bottom line, with adjusted earnings per share coming in at $13.37, compared to estimates of $11.66.
Limited-time offers like Chicken al Pastor, which is priced at a premium, helped boost results. The chain saw a 5.4% increase in foot traffic, though the average check was only up 1.6%, lower than the 2% Wall Street expected.
For 2024, Chipotle expects sales growth of mid- to high-single digits, up from the previous guidance of mid-single-digit growth.
Following the results, the company had one of the most active ticker pages on Yahoo Finance. The stock had its best day since Feb. 7 and closed at a record high.
As consumers start to think twice about their purchases, Hartung said the chain is seeing diners across income levels continuing to visit the restaurants.
"Low, medium, or high [income], they're spending at the same level, they're increasing their purchase, their visits," Hartung said. "I know there's other patterns out there, but so far, I think Chipotle is affordable."
That value proposition is something that Wall Street has keyed in on as well.
"We expect sales momentum to continue for the foreseeable future, with second quarter 2024 same-store sales and traffic higher than the first quarter owing to several factors, and believe same-store sales could end the year near the high-end of its outlook," BTIG analyst Peter Saleh wrote in a note to clients.
UBS analyst Dennis Geiger said in a client note that Chipotle's "impressive results are likely to standout in what could be a difficult quarter for the industry," adding that the 7% sales growth was in part supported by a "compelling value proposition."
In March, Chipotle's board of directors approved a 50-for-1 stock split, the biggest in New York Stock Exchange history. It needs to get shareholder approval on June 6. The move will make the stock, which has shot up 360% in the past five years, more accessible to the average retail investor.
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].
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