Chipotle shares rise 7% after CEO says same-store sales growth will continue

Chipotle Mexican Grill on Wednesday reported mixed quarterly results and said its restaurant-level operating margin shrank.

But the burrito chain saw traffic and same-store sales grow during the quarter as low-income consumers spent more, bucking industry trends, and CEO Scott Boatwright projected a strong finish to the year.

"Broader consumer and industry headwinds may continue, but initiatives across our recipe for growth strategy are building and giving us more tools to win in any environment," Boatwright said on the company's earnings conference call. "We are still in the early stages of this work, and it's gaining traction."

Like the broader restaurant industry, Chipotle saw trends soften in early October, although executives said its traffic has returned to growth since then. Boatwright said the company has "high confidence" in its performance for the rest of the fourth quarter.

"We feel very confident that November and December set up very well for us," Boatwright said.

Chief Financial Officer Adam Rymer said the company expects fourth-quarter same-store sales growth of about 2%.

Here's what the company reported for the period ended Sept. 30 compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Chipotle reported fiscal third-quarter net income of $339.9 million, or 27 cents per share, down from $382.1 million, or 29 cents per share, a year earlier. The company's restaurant-level operating margin fell from 24.5% to 23.3%.

Excluding restaurant asset impairment charges and stock-based compensation, the company earned 27 cents per share.

Net sales rose 9.6% to $3.29 billion, fueled by the chain's new restaurants. During the quarter, Chipotle opened 84 company-owned restaurants and five international locations run by licensees.

In the second half of July, Chipotle said it started to see sales pull back as diners grew concerned about consuming raw lettuce due to cyclospora, although its own supply was never tied to an outbreak. Then in August, the chain disclosed that it had temporarily pulled jalapenos from Minnesota restaurants after learning its supply was potentially linked to a salmonella outbreak.

Still, the chain was able to report same-store sales growth for its third straight quarter, shaking off last year's traffic woes.