Earlier this month, the burrito chain missed second-quarter revenue estimates and lowered its annual forecast for same-store sales, causing the stock to slide.
Chipotle Mexican Grill CEO Scott Boatwright believes that as economic pressures ease and spending trends pick up, customers will return to the burrito chain in a big way, given its value proposition and innovative menus, he said in an interview with CNBC’s Jim Cramer on Wednesday night.
While noting the weakness in the restaurant space, he argued that wage growth was outpacing inflation and, coupled with strong job market data, could support a rebound in the sector.
“We know the consumer is going to come back into the space; we have to ensure that we’re delivering on value,” Boatwright said in the video interview, adding a mention to Chipotle’s recently launched “Build-Your-Own Chipotle” meal kit for online customers.
Boatwright’s reassuring comments come as his company’s stock nosedived to a 19-month low earlier this month after its poor quarterly report. Chipotle’s second-quarter revenue grew less than expected; at the same time, the same-store sales declined more than expected, prompting the company to lower its full-year forecast to flat growth.
Restaurant chains, including Chipotle, have flagged weakness in dining out, particularly among consumers from lower- to mid-income segments.
“I have confidence we can get back to mid-single-digit growth,” Boatwright said, without specifying the period or metric he was talking about.
“We’re going to continue to grow restaurants at 8 to 10% annually. We will build another 315 to 345 new Chipotle restaurants this year,” he said.
Including the slide after the Q2 report, CMG stock is down nearly 30% year-to-date, compared to the nearly 2% gain in AdvisorShares Restaurant ETF (EATZ), a benchmark for U.S. restaurants and fast chain stocks.
Commenting on the recent stock performance, Boatwright said investors are likely confused: “Are we a growth company or are we a mature company?”
“I think we enjoyed a really strong year last year, and if you look at our two-year comp numbers, they’re still outpacing the industry and the segment of fast casual,” he said.
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