The numbers: Disappointing, but only compared to the high bar previously set by Chipotle. Sales at stores open more than a year were up 10.4% compared to the same quarter last year. Sales reached $1.09 billion, a 20.9% increase. Both metrics fell short of Wall Street’s estimates, and the stock was down more than 5% after hours. Chipotle is forecasting comparable sales over the next few months to be in the “low-to-mid single digits.” It’s growing, but at a slower pace.
The takeaway: Pork is a problem. The company removed a large pork supplier in January because it didn’t mean the company’s standards for humane treatment. That led to a carnitas shortage, which CFO Jack Hartung said is hurting sales by as much as 2%. He said supply won’t be back to normal until the fourth quarter this year.
“The vast majority of our customers tend to find their favorite burritos or favorite bowl combination, and then they order that favorite meal every single time they visit,” Hartung said on today’s earnings call. “We had hoped the shortage would encourage our carnitas customers to try another menu option, and some did, but many have decided to hold out until carnitas returns to their market.”
What’s interesting: Chipotle is hitting harder at other fast food competitors, emphasizing the fact that the company’s whole menu only has 68 total ingredients, most minimally processed. Marketing chief Mark Crumpacker compared that to an unnamed fast food competitor, where a single burrito contains 85 ingredients. This distinction will be the focus of an extensive new marketing campaign.