Chipotle stock soars and pays dividends for investors

Initially met with skepticism by investors and analysts alike, Chipotle’s across-the-board price increment in April has since proven to be a savvy business move. The…

Chipotle’s stocks are soaring. (www.flickr.com/saechang)

Initially met with skepticism by investors and analysts alike, Chipotle’s across-the-board price increment in April has since proven to be a savvy business move. The Colorado-based food chain’s stock soared a whopping 12% this week after the company’s quarterly report was released.

The news marks the latest improvement in a series of promising developments for a corporate newcomer that has already begun to challenge established food giants such as Burger King and McDonald’s.

As Ben Rooney of CNN Money reports, “The Denver-based burrito maker said it earned $3.50 per share in the second quarter. It was expected to have made $3.09 per share, according to estimates from FactSet. That’s ‘hot, hot, hot’ on Wall Street.

SEE ALSO: How Chipotle is changing the fast food scene for the better

The stock is now at an all-time high, trading above $660 a share (in other words, the stock now costs as much as roughly 80 burritos).”

Hike in Chipotle’s prices had no ill affect

Analysts explain that the stock surge is mostly due to the restaurant chain’s recent hike in prices, which has done little to deter customers from continuing to line up for their preferred customized burritos and bowls.

Rooney goes on to explain that, “Revenue rose 28% to $1.05 billion, surpassing analysts’ estimates, as higher prices boosted the top line. The price hikes also haven’t taken a toll on store traffic. Same-store sales, a key measure of growth, increased 17% in the second quarter. That was one of the strongest quarterly sales rates in Chipotle’s history as a public company, according to CEO Steve Ells.”

While the hike in prices has proven to be a fortuitous move for the company, it wasn’t a decision that was entirely motivated by a desire to increase the chain’s profit margin. Rather— as has been the case with multiple other food chains—Chipotle was reacting to a rise in basic ingredient prices, such as meat and cheese.

SEE ALSO: Chipotle’s ‘Cultivating Thought’ forgets to cultivate Latino authors

Meanwhile, as of now, even the most cautious estimates foresee continued growth for the remainder of the year. Despite its similarities to fast food chains—especially in terms of price range and serving speed—Chipotle has continuously presented itself as the healthier alternative to customers and investors alike. So far, the business plan is paying dividends as the CEO Steve Ells plans to open another 195 restaurants by the end of the year.

In a statement, Ells emphasized the company’s excitement about its future prospects: “We’re pleased that we continued to drive excellent results in the second quarter, including one of our strongest sales comps as a public company. These extraordinary results are made possible by our special food culture, innovative