Chipotle Issues 2017 Guidance, Some See Price Increases Ahead

Chipotle Mexican Grill, Inc. (NYSE: CMG) shares fell over 5 percent after the restaurant chain released updated guidance reported on BenzingaPro.

Notable Takeaways

• Food costs are expected to be about 34.2 percent of sales.
• Marketing/promotional costs are anticipated to rise about 20–30 basis points year over year.
• Operating costs are expected to be higher than in the first quarter.

Sara Senatore, a senior research analyst for Sanford Bernstein, said, “We think the margin guidance suggests CMG is finding further cost saves - given avocado prices are somewhat higher than expected- and that revenues are likely in-line with internal expectations with perhaps more room for price ahead.”

In her view, “Higher food costs and in-line topline could presage broader price increases beyond the current 20 percent of stores.”

Chipotle was trading down 6.15 percent at $430.69 at the time of publication.

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