Chipotle says Q3 cost of sales just below 31%

CFO Jack Hartung says: “For Q3, we expect our cost of sales to be just below 31%, but one-third of the step-up there due to the higher protein costs as we roll up tick in our past or and then month. Smoked brisket later in the quarter by one-third is due to an uptick and dairy and avocado prices. And the final third or about 40 to 60 basis points is an investment we’re making as we focus on out higher restaurant to ensure correct and generous portions. We expect this investment will ease from these levels somewhat, and we also believe that we can offset the remaining investment with efficiencies and innovation over time. While avocado prices are higher than the very favorable levels we have seen over the past several quarters. This is in line with our expectations from earlier this year. Additionally, we are less impacted by the recent volatility in the Mexican avocado market as our supply chain team has done a fantastic job of diversifying our exposure. And in the third quarter, the majority of our avocados come from growth outside of avocados and a protein mix shift. We anticipate underlying cost of sales inflation will be in a low single digits range for the remainder of the year.” Comments taken from Q2 earnings conference call.