First-quarter net income jumped 22.6%, to $46.4 million, or $1.46 per share. Chipotle's revenue surged 24.3%, to $509.4 million, and same-store sales jumped a healthy 12.4%.
A couple of negative factors dragged on the restaurant's results, though. Restaurant-level operating margin came in at 25.2%, a 90-basis-point decrease from this time last year. As with many restaurant companies, rising commodities prices have begun to gnaw at profitability. Profit growth has also slowed down in response; just compare Chipotle's 22.6% gain this time around to its 47% increase in the previous quarter.
Chipotle also faces a criminal probe related to past hiring of illegal immigrants -- an unwelcome addition to the company's quarterly results. To its credit, the company has been tightening its procedures in checking employees' citizenship status.
Chipotle, which is replacing Novell
Still, Chipotle's traditionally high valuation has reflected its extremely successful business, yielding high levels of growth. Compare Chipotle's results to Cheesecake Factory
Rising commodity prices will challenge all restaurant companies in the near term, a risk hardly limited to Chipotle. I'd rather buy into a company like Chipotle or McDonald's then a pricier sit-down dining company like Cheesecake Factory, since the formers' already relatively low menu prices give them some wiggle room in passing costs onto customers without scaring them away.
Furthermore, Chipotle operates under a forward-looking, visionary business model, focused on using natural and sustainably raised ingredients in its burrito offerings. That kind of responsibility gives it a competitive edge.
Today's tidings are taking a bite out of Chipotle's stock price. However, if you're an opportunistic investor willing to hold for the long haul, times like these provide engraved invitations to get a slightly cheaper helping of Chipotle.