Chipotle’s Covid-19 Costs Weigh on Its Profit

The company, based in Newport Beach, Calif., reported earnings adjusted for one-time items of $3.48 a share for the fourth quarter, compared with $2.86 a share a year earlier. The latest results were short of the $3.73 a share that analysts expected. Sales of $1.6 billion hit expectations.

Shares in the chain fell nearly 2% to $1,495 in after-hours trading. “The pandemic has presented new challenges for all of us,” Chipotle Chief Executive

Brian Niccol

said to investors.

Labor has become a growing concern for companies as diverse as manufacturers and food producers during the pandemic. Some restaurant chains have said they expect labor costs to rise this year as they pay to hire and retain workers in public-facing roles. The Biden administration is also looking to boost the minimum wage, which would translate into higher wages for many restaurant chains.

Restaurants are also navigating changing indoor-dining regulations during the crisis. Chipotle said about 60% of its dining rooms were currently open for limited indoor dining, down from 85% of locations offering indoor or patio dining in October.

Chipotle has booked strong to-go sales throughout the pandemic. The chain said online orders accounted for nearly half of its sales during the latest quarter and were up 177% from a year earlier.

A same-store sales increase of 5.7% over the previous year was roughly in line with expectations. Chipotle said its sales benefited from higher menu prices recently tested on delivered meals, and new menu items such as carne asada. The chain said that delivery now accounts for about 25% of its sales, and that it is testing a range of higher prices on those to-go orders to improve profit.

Chipotle is continuing to open new stores during the pandemic. The chain said it opened 61 new restaurants during the most recent quarter, including 42 of them with digital-order drive-throughs. The chain said it expects to open about 200 restaurants in its 2021 fiscal year if coronavirus-related delays are minimal. Chipotle is also trying to boost the ranks of its employees, and held a national hiring day last month to help it reach a goal of 15,000 additional U.S. workers.

For the quarter, Chipotle reported earnings of $6.69 a share on income of $191 million.

Write to Heather Haddon at heather.haddon@wsj.com

Corrections & Amplifications
Chipotle’s online orders grew 177% in its fourth quarter from a year earlier. An earlier version of this article incorrectly said they grew 117%. (Corrected on Feb. 2)