Chipotle Mexican Grill (CMG) sees sales rising at its restaurants despite raising prices last week, Chief Executive Brian Niccol said at a Baird conference on Tuesday.
The news didn’t appear to affect Chipotle shares much. They recently traded at $1,337, barely changed. They have eased 0.7% over the last six months, compared to a 14% gain for the S&P 500.
The price increases were implemented last week and totaled as much as 4%. They came as Chipotle faces higher food prices and has boosted wages, while announcing plans to hire an additional 20,000 workers. The company projects its average hourly wage will be at $15 by the end of June.
Regarding the pay hikes, Niccol said "it made sense in this scenario to invest in our employees and get these restaurants staffed and make sure that we have the pipeline of people to support our growth," according to Fox Business News. "And then with that, we've taken some pricing to cover some of that investment."
Chipotle expects average annual unit sales will climb to $3 million to $3.5 million in the near term, compared to the recent level of $2.4 million, Niccol said, according to Bloomberg.
There are “still unknowns” for comparable-store sales, Niccol said. But Chipotle sees growth for deliveries and takeout.
Last month, Stephens analyst James Rutherford upgraded Chipotle to overweight from equal weight. He also lifted his share-price target to $1,700 from $1,600.
Among the bullish factors: “The long-term picture for same-store sales is better than it ever has been with an increasing mix of sustainable digital sales,” Rutherford said.