Chipotle's profit misses estimates as COVID-19 costs mount

(Reuters) – Chipotle Mexican Grill Inc on Tuesday missed Wall Street estimates for quarterly profit, hurt by costs related to keeping its business running during the COVID-19 pandemic, and the fast-casual chain’s shares fell as much as 4% after the closing bell.

FILE PHOTO: The logo of Chipotle Mexican Grill is seen at the Chipotle Next Kitchen in Manhattan, New York, U.S., June 28, 2018. REUTERS/Shannon Stapleton/File Photo GLOBAL BUSINESS WEEK AHEAD

The burrito chain’s strong digital operations have helped the company ride out the worst of the pandemic, even as its expenses have climbed as it bolsters its delivery network.

Digital sales rose nearly three-fold and drove a 5.7% rise in comparable sales, helped by a surge in online orders in some parts of the United States.

Total revenue increased 11.6% to $1.6 billion for the fourth quarter ended Dec. 31, the company said.

Excluding one-time items, the company earned $3.48 per share, missing the estimate of $3.73, according to IBES data from Refinitiv.

“It is now well established that November was weak across the space, and while Chipotle is resilient, it is not immune,” Piper Sandler analysts wrote in a note after earnings report.

“Chipotle remains our highest conviction recommendation based on confidence that the company has the human capital, operational capabilities, and technological tools to carry out its long-term growth strategy,” they wrote.

The company’s share price was up more than 10% so far this year and rose 66% in 2020 – by far the best-performing stock in the restaurant industry, according to Credit Suisse.

Its success came partly from its ability to ramp up digital sales quickly during the pandemic. For the full-year 2020, Chipotle’s digital sales grew 174.1% to $2.8 billion and made up 46.2% of sales. About half of digital sales were for delivery orders.

Chipotle has not been providing sales forcasts during the pandemic. However, for 2021 it said it expects to open 200 new restaurants and have an effective tax rate between 25% and 27%.

It is testing quesadillas, as well as smoked brisket, after its January nationwide launch of cilantro-lime cauliflower rice for a limited time.

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