CMG Earnings
Some thoughts from early in the 2Q22 earnings season. Chipotle (and MCD) both called out that low-income consumers are struggling, but higher-income consumers are spending; though possibly are trading down; restaurants are returning to normal use patterns; food costs are a significant problem and have not peaked.
CMG reported non-GAAP EPS of $9.30 for 2Q22, $0.26 above street estimates, and a 16.9% increase in revenue to $2.21B, missing the consensus. Notably, comparable restaurant sales increased by 10.1%, while restaurant level margin increased by 70bps on aggressive menu price increases. Regarding 2Q22, through mid-May, comparable sales were on track to reach the top end of the guidance range. Still, since then, the underlying trend has decelerated, and anticipate mid to high-single-digit comps for 3Q22 by aggressively raising prices by 4% more in August. The CEO commented, "Our pricing power and value proposition remain strong as our culinary and food with integrity commitment continues to be a key point of differentiation." The company is pressing this theory hard and, like every company that has deployed this strategy in the past, will feel the blowback from changes in consumer behavior.
A big topic on the call was throughput, which has decreased because the company has a turnover problem. "Our restaurants are staffed with terrific people despite a difficult hiring and retention environment, and our people are still getting up to speed on running a growing multimillion dollar digital business as well as a growing multimillion dollar in-restaurant business." This issue is likely the reason (along with supply chain problems the company missed on unit openings.
CHEF Earnings
CHEF 2Q22 Non-GAAP EPS of $0.51 beats by $0.17, and Revenue of $648.1M (+53.2% Y/Y) beats by $47.34M.
Adjusted EBITDA $45.3M beat by $10 million, yet new (A)EBITDA of $135M-$145M is up only by $5 million and FactSet $132.7M
Gross Profit to be between $553.0M and $576.0M vs. prior $542M-$565M
Gross profit increased 62.7% to $156.0 million for 2Q22 from $95.9 million for 2Q22.
FY Guidance (Dec 2022): Revenue $2.375B-$2.475B vs prior guidance $2.325B-$2.425B and FactSet $2.38B
