Will expensive burritos burn Chipotle Mexican Grill's (NYSE:CMG) revenue growth?
That's the question on investors' minds since shares of Chipotle Mexican Grill ended last week by falling 6% on disappointing quarterly results. While Chipotle achieved impressive 24.4% top-line growth on a 13.4% increase in comparable restaurant sales, the burrito maker's earnings lagged behind as rising food costs ate into its bottom line.
To make matters worse, when Chipotle announced its first price increase in three years, investors reacted with skepticism as they wondered whether diners would spurn the move.
But according to the Fool's Steve Symington in the following video, there are several reasons raising prices shouldn't be a problem for Chipotle. After all, Chipotle made clear its methodical approach to price incresases long ago, and Steve thinks the fast-casual chain has already built priceless customer loyalty by refraining to do so up until this point. To hear Steve's full take on what this means for Chipotle investors, please watch the video.