Higher prices aren’t enough to keep burrito lovers away from Chipotle.
The Denver-based chain reported a 25-percent jump in profit in the second quarter from the same time a year ago. Same-store sales -- a closely watched retail metric tracking sales of stores open more than a year -- jumped 17.3 percent from a year ago.
All this despite the fact that the company raised prices over the past few months in an aim to counter food inflation.
“It seems that most customers haven’t blinked at a little bit of a menu-price increase,” Mary Chapman, the director of product innovation at Technomic, a food research firm, said before the company reported earnings.
Chipotle’s blockbuster earnings come at a time when other restaurants are struggling. Red Lobster and Olive Garden reported decreases in same-store sales during their most recent earnings reports. KFC and Pizza Hut saw sales at U.S. established stores drop 2 and 4 percent, respectively.
It helps that Chipotle has loyal customers: Chipotle consistently scores highly in “occasion driven by true loyalty,” a wonky term monitored by analysts who follow the food business. It essentially measures how often diners go to a restaurant because they seek it out, not just because it’s convenient, according to Dave Jenkins, a managing director at Datassential, a food research firm. Customers appreciate Chipotle’s “aura of health consciousness,” he said. And because they typically get so much food at Chipotle, diners see it as a good value, even with the price increases.
“For whatever reason, they crave the product,” Jenkins said.
Indeed, though price increases did help boost same-store sales figures, store traffic grew, too, according to the earnings release.