A customer carries a Chipotle Mexican Grill Inc. bag outside a restaurant in San Francisco, California, United States on Monday, July 20, 2020.

David Paul Morris | Bloomberg | Getty Images

Chipotle Mexican Grill on Thursday reported quarterly earnings that drove Wall Street estimates as menu price increases helped the chain absorb higher costs.

The company’s shares rose more than 1% in expanded trading.

Here’s what the company said, relative to Wall Street expectations, based on an analyst survey by Refinitiv:

  • Earnings per share: $ 7.02 adjusted versus $ 6.32 expected
  • Revenue: $ 1.95 billion versus an expected $ 1.94 billion

The company reported net income of $ 204.4 million, or $ 7.18 per share, for the third quarter, compared to $ 80.2 million or $ 2.82 per share a year earlier.

Beef and freight costs were higher, but menu price increases offset the effects of those increased spending. In June, the chain announced that menu prices would increase by about 4% to cover the cost of increasing restaurant workers’ wages to an average of $ 15 an hour.

Excluding tax breaks, restructuring charges, and other items, Chipotle earned $ 7.02 per share, beating the $ 6.32 per share analyst survey surveyed by Refinitiv had expected.

Net sales rose 21.9% to $ 1.95 billion, beating expectations of $ 1.94 billion. Sales in the same store rose 15.1%, beating StreetAccount’s estimate of 14%.

Digital sales rose 8.6% after more than tripling a year ago. The company’s loyalty program has gained 24.5 million members in two and a half years, helping Chipotle learn more about its customers and encourage more frequent visits.

“There’s no doubt that the loyalty program has moved from crawling to walking, and we still have plenty of room to grow,” said CEO Brian Niccol on the conference call.

At the end of the quarter, the chain Smoked breast introduced as a time-limited menu option. Due to the strong demand, the item’s availability will end a little earlier than originally planned in November. Under Niccol, who previously directed Yum Brands’ Taco Bell has accelerated the process of adding new menu items through a process it calls stage-gate testing. The chain has been strategic with new releases and many of them have limited time options to drive customer traffic to their restaurants and keep the menu from bloating.

The company opened 41 new restaurants in the quarter. Only five of these locations did not have a “Chipotlane”, a drive-through lane intended for the collection of digital orders. Executives said the company is still facing inflation in building materials, shortages in labor and equipment from subcontractors, and delivery delays from landlords.

Looking ahead to the fourth quarter, the company is forecasting low to mid double-digit revenue growth in the same business. Chipotle noted several uncertainties weighing on the business, such as inflation, workforce pressures, and Covid-19.

“Despite these challenges, we remain confident that we can increase the margins in the restaurant with increasing average quantities,” said CFO Jack Hartung.

Chipotle also announced that its board of directors has approved an additional $ 100 million in share buybacks, bringing its total approval to $ 209.8 million as of September 30th. The company repurchased $ 98.7 million in shares in the third quarter.

Read the full announcement of the results here.