Chipotle's quarterly earnings outshine McDonald's, despite raising menu prices due to drought News10/KXTV
The ongoing drought has put Chipotle in a tough spot. Much of their menu revolves around water-dependent ingredients hit hard by the drought including meat, cheese, guacamole, and avocados. Consequently, they have had to raise their prices for the first time in three years. But it looks like customers keep coming back for more.
Sales rose 17.3 percent in the quarter, and that's better than what they expected. The company's profits reportedly went up 26 percent and both earnings and revenue were positive. On top of that, Chipotle opened 45 new restaurants in the second quarter, and plans to open up to 195 restaurants in 2014.
Yahoo Finance is comparing Chipotle's earnings with that of McDonald's, which reported earnings and revenue that missed analysts' estimates in the second quarter. Global same-store sales for the fast-food chain were "relatively flat", while U.S. same-store sales fell 1.5 percent.
For quite some time now, McDonald's has been coming up with marketing campaigns to try and draw the millennial generation away from Chipotle, which is a huge part of its customer base.
Chipotle raised its sales outlook for the full year, while McDonald's does not expect to see much in the way of growth this year.
It was also noted in the article that McDonald's once had a majority stake in Chipotle, but unloaded it in 2006 when the company went public.
Despite Chipotle's higher prices than McDonald's, it seems customers are willing to pay more for ingredients marketed as fresher, healthier and of higher overall quality.