Chipotle quarterly results shine as burrito cravings defy high prices

People are served in a Chipotle outlet in Manhattan, New York City

By Deborah Mary Sophia

(Reuters) -Chipotle Mexican Grill surpassed market expectations for quarterly results on Thursday, as unwavering demand for its burritos and rice bowls and a strong boost from limited-time promotions helped defy a broader weakness in the restaurant industry.

Dining traffic has slowed across the industry, but Chipotle's wildly popular Carne Asada protein returned to menus in September for a limited time, helping boost footfall at its outlets.

The company has also banked on its rewards program to drive transactions higher through targeted promotions, and ramped up training for its staff to boost efficiency at stores.

Trends have remained strong so far in October, CEO Brian Niccol said on an earnings call, adding that even lower-income consumers were holding up "really well".

Chipotle raised prices by 3% in October after pausing hikes for over a year, but margin benefits would be offset by higher dairy and beef costs, it said.

Shares rose about 3% in extended trading.

"Expectations were fairly low just given everything that we've seen in restaurant land with the GLP-1 (weight-loss drugs)," said Sante Faustini III, director of product intelligence at M Science.

Chipotle said it has not seen any material impact from weight-loss drugs.

While consumers taking weight-loss treatments consume fewer calories, "it's important the calories they do consume are coming from clean food. And that's what we provide... so we're still well-positioned even for those that decide to use the drug," Niccol said in an interview.

With the minimum wage for fast-food workers in California set to rise to $20 by April next year, Chipotle said that would add 2.5%-3% to its cost inflation.

Comparable sales at the California-based chain climbed 5% in the third quarter, beating a 4.46% increase expected by analysts on average, according to LSEG data.

Excluding items, Chipotle earned $11.36 per share in the quarter, topping estimates of $10.55.

Chipotle forecast fourth-quarter comparable sales growth in the mid- to high-single-digit range, compared with estimates of a 5.38% rise.

(Reporting by Deborah Sophia in Bengaluru; Editing by Krishna Chandra Eluri and Devika Syamnath)