Chipotle Mexican Grill, Inc. GCM consumers, especially low-income consumers, are opting to forego the Tex-Mex chain’s burrito bowls as inflationary concerns drive customers to order less, perhaps choosing to budget for upcoming holiday shopping instead.
“The consumer, based on the data we’re tracking, is very concerned about the inflationary environment,” the Chipotle CEO said. Brian Nicol told CNBC on Tuesday. “We continue to see strength in the high-income consumer – we’ve certainly seen a bit of a pullback from the low-income consumer.”
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According to the consumer price index, out-of-home food, which includes restaurants, rose 8.6% from a year ago. Food from home, which includes groceries, was up 12.4% from a year ago, and food as a whole was up 10.9%.
Chipotle last raised prices in August to help cover higher labor and food input costs, a mid-to-high single-digit percentage increase. The company also increased its prices at the start of 2022 by around 4%.
Niccol said customers with household incomes of $75,000 don’t order as often. The majority of Chipotle customers, however, are high earners who have actually increased their purchase frequency.
The burrito chain primarily targets higher-income customers who can afford the chain’s price increases. As a result, Chipotle continues to produce excellent quarterly sales and earnings.
“We look like we’re picking up experiences with the high-income consumer,” Niccol said.
Chipotle delivered $9.51 per share in the third quarter, on revenue of $2.2 billion, both above consensus estimates.
CFO Jack Hartung said on its recent earnings call that Chipotle’s comparable stores in October were trending up a single-digit percentage.
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The company expects same-store sales to grow mid- to high-single digits for the fourth quarter, buoyed by its recent price increases and the release of a new menu item.
– CNBC Closing Bell (@CNBCClosingBell) November 15, 2022
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