Chipotle Mexican Grill, Inc.'s CMG consumers, specifically its lower-income consumers, are opting to forego the Tex-mex chain’s burrito bowls as inflationary concerns are driving customers to order out less, perhaps choosing to budget for upcoming holiday shopping instead.
“The consumer, from the data we track, is very much concerned about the inflationary enviornment,” Chipotle CEO Brian Niccol told CNBC Tuesday. “We continue to see strength in the higher-income consumer — we’ve definitely seen a bit of a step back from the lower-income consumer.”
Read also: Fed Officials Thought Americans Had Trillions In Excess Savings, New Data Shows They Were Wrong
Food away from home, which includes restaurants, is up 8.6% over last year according to the Consumer Price Index. Food at home, which includes groceries, is up 12.4% over last year, and food overall is up 10.9%.
Chipotle last increased pricing in August to help cover higher costs for labor and food inputs, a mid-to-high single-digit percentage increase. The corporation also increased pricing in early 2022 by around 4%.
Niccol stated that customers with household incomes of $75,000 were not ordering as frequently. The majority of Chipotle's patrons, though, are high earners who have actually increased their shopping frequency.
The burrito chain primarily targets customers with higher incomes who can afford the chain's price increases. As a result, Chipotle is still producing great quarterly sales and profits.
“We look like we’re picking up experiences with the higher-income consumer,” Niccol said.
Chipotle delivered $9.51 per share in the third quarter, on revenues of $2.2 billion — both above consensus estimates.
CFO Jack Hartung said on its recent earnings call that Chipotle's same-stores in October are trending up by a mid-single-digit percentage.
Read also: It May Be Time To Take A Bite Of Food Stocks As Recession Fears Still Loom
The company expects same-store sales to rise by a mid to high single-digit percentage for the fourth quarter, supported by its recent price hikes and the release of a new menu item.
Photo: Courtesy of shutterstock.com
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.