Feb 7 (Reuters) - Chipotle Mexican Grill Inc missed quarterly comparable sales expectations on Tuesday, in a sign that price hikes are taking a toll on demand for the restaurant's burritos and rice bowls.
Shares of the company fell 3.9% in extended trading.
While Chipotle enjoyed steady demand for its pricier menu items from its relatively wealthier customer base for much of last year, persistently high inflation across product categories is causing even affluent diners to look for cheaper options such as McDonald's.
Visits to Chipotle restaurants fell 10.2% in the fourth quarter, according to data from Placer.ai. McDonald's visits rose 29.4% in the same period.
Comparable sales at the California-based chain rose 5.6% in the fourth quarter ended Dec. 31, while analysts on average expected a 7.1% rise, according to Refinitiv IBES.
The company reported profit of $8.29 per share, an increase of 48.6%. Analysts on average expected profit of $8.90.
Chipotle forecast comparable sales growth in the high-single digits for the current quarter in its earnings release and said it expects to open 255 to 285 new restaurants in 2023.
Revenue rose to $2.18 billion from $1.96 billion in the quarter, missing estimates of $2.23 billion.
Falling prices for avocados, along with higher menu prices, helped the chain reduce food, beverage and packaging costs to 29.3% of total revenue in the quarter, a decrease of 230 basis points - despite higher costs for cheese and tortillas.
Some investors are worried about the cadence of falling traffic in 2022, analysts at Cowen said in a research note.
In particular, they are concerned over customers trading down to cheaper fast-food options and a slow down in delivery orders.
But the chain can drive sales in 2023 through menu items including Chicken Al Pastor, a growing advertising budget and a loyalty program with 30 million members, the analysts said.
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