October 20, 2014 / 8:18 PM / 3 years ago

Chipotle stock dips as sales growth forecasts come down

(Reuters) - Chipotle Mexican Grill Inc (CMG.N) on Monday reported another acceleration in quarterly restaurant sales growth, but shares in the popular burrito seller tumbled almost 5 percent after it signaled that such momentum can’t last forever.

Denver-based Chipotle for years has appeared to defy gravity with its recipe of premium organic and natural food that bucks the trend toward ever-cheaper fast-food.

But it’s not just about the burritos, investors are fans of its uncanny ability to squeeze ever more sales from its restaurants without adding extra staff. Still, many on Wall Street expected Chipotle’s red-hot run to eventually cool.

“It’s completely unrealistic to expect they can maintain 20 percent (same-restaurant sales growth) indefinitely,” Investment Technology Group restaurant analyst Steve West said.

Even with the tempered outlook, West said, Chipotle’s restaurant sales momentum remains the industry’s “spiciest”.

Shares in Chipotle, which in August touched an all-time high of nearly $679, fell 4.8 percent to $622 in extended trading.

Third-quarter sales at Chipotle restaurants open at least 13 months, a closely watched gauge of industry performance, soared 19.8 percent, better than the 17.2 percent increase expected by analysts polled by Consensus Metrix.

Chipotle, which sells “good food, fast” and has cut virtually all genetically modified organisms (GMO) from its food supply, saw same-restaurant sales soar 17.3 percent in the second quarter. It logged a 13.4 percent gain in the first quarter.

    Such results are the envy of the U.S. restaurant industry. For example, McDonald’s Corp (MCD.N) is reporting on Tuesday and its U.S. same-restaurant sales are expected drop nearly 3 percent for the third quarter.

    Chipotle executives said on a conference call that they are bumping up against high hurdles with regard to beating strong sales results from a year ago.

    As a result, they reiterated their 2014 forecast for same-restaurant sales growth in the mid-teen percentages. They also forecast 2015 restaurant sales growth in the low- to mid- single digit percentages.

    Chipotle’s third-quarter net income was $130.8 million, or $4.15 per share, up from $83.4 million, or $2.66 per share, a year earlier, the company said.

    Revenue jumped more than 31 percent to $1.08 billion during the quarter, as it attracted more diners and benefited from recent menu price increases.

    Reporting by Lisa Baertlein in Los Angeles; editing by Matthew Lewis, Gunna Dickson and Andrew Hay

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