Chipotle plunges after earnings miss, possible price increases

Chipotle Mexican Grill Inc. enjoyed double-digit increases in both its net income and revenue in its third quarter, but consider Wall Street unimpressed.

The burrito chain’s stock is tanking following its after-market earnings release, with shares down nearly 13%, or $36.44, to $249.49.

Profit for the quarter ended Sept. 30 came in at $72.3 million, or $2.27 a share, up 19.6% from $60.4 million during the same period a year earlier. Revenue was up 18.4% to $700.5 million. But analysts had expected Chipotle, long an investor darling, to hit higher marks.

The bloom’s been off the burrito for a while. Earlier this month, influential hedge fund manager David Einhorn single-handedly caused the company’s stock to tumble 7% in five minutes when he voiced concerns that the chain was growing too fast while raising prices and batting off fresh competition from Taco Bell.

In July, after announcing its second-quarter earnings, Chipotle lost nearly a quarter of its market value when it failed to meet analyst expectations.

During its third quarter, same-store sales were up 4.8%, according to the chain, pushed by increased customer traffic and also by menu price increases on the West Coast. The average check was smaller than expected, which executives blamed on “a more cautious consumer.”

The company said it opened 36 restaurants.

Executives said year-over-year comparisons in the next quarter may be disappointing because of the surge of business last winter, a result of unseasonably warm weather. Chipotle also said it wouldn’t rule out more menu increases as the result of inflationary pressures related to the severe summer drought and an uncertain economic environment.

ALSO:

Drought leads restaurants to raise prices, cut portions

The Einhorn effect: Chipotle tumbles after Taco Bell comparison

Debate rages over alleged Chipotle, Forever 21 penny skimming