Investors and analysts were surprised when Chipotle posted a 167 percent jump in earnings for the second quarter on July 25. The fast food burrito chain has been battling bad press and consumer fears after a several outbreaks of food-related illness linked to its franchises.
According to Chipotle’s corporate news release, second quarter diluted earnings per share increased 167% ($2.32 per share), restaurant sales increased 8.1% and revenue growth jumped 17.1% compared to the same period last year. Revenue for the quarter was $1.17 billion, driven by new restaurant openings, according to the company.
U.S. News & World Report asked Todd Milbourn, Vice Dean and the Hubert C. & Dorothy R. Moog Professor of Finance at Olin, to comment on the beleaguered company’s unexpected earnings rebound:
Milbourn
©Photo by Jerry Naunheim Jr.
“Chipotle posted a second-quarter earnings figure that was apparently more than enough for investors to overcome any negative sentiment,” related to the outbreak, said Milbourn.
U.S. News & World Report claimed Wall Street analysts were expecting EPS of $2.18 on revenue of $1.19 billion.
Chipotle reported that comparable restaurant sales improved primarily due to an increase in customer visits, along with an increase in average check as a result of a reduction in promotional activity. The company opened 50 new restaurants during the quarter, and closed two restaurants, bringing the total restaurant count to 2,339.
