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Chipotle exceeds sales expectations and pledges More changes ahead



Parrotle Mexican Grill
Inc.


CMG 1.93%

is finally giving investors something to be satisfied with.

The burrito maker's stock recovered on Wednesday after the company reported better-than-expected earnings and sales for its first quarter.

Chipotle has struggled for more than two years to recover customers after a series of food safety scares. In February, the chain named

Brian Niccol,

former CEO of Taco Bell, his new CEO, instead of founder Steve Ells.

Presiding over his first earnings call as CEO of Chipotle, Mr. Niccol thanked Mr. Ells, who is still chairman of the board, on Wednesday for giving him the autonomy to name his own team and make changes in the chain strategy. Mr. Niccol has already hired a new marketing manager and director of human resources.

"The opportunity is clearly a history of recovery in the United States," Niccol said. He would not explain his plans. He said he would keep a call to discuss his recovery plans with investors in more detail before Chipotle's next quarterly earnings report. Shares, down 28% in the last year, rose more than 10% to $ 374.99 in trades after Wednesday.

Chipotle recently launched ads that show the quality of its ingredients. Analysts criticized a previous campaign that did not focus on the chain's food, and Niccol said the company will do more ad testing to understand what resonates.

"Since the arrival of Brian we have taken a fresh look at every part of our business," Chief Financial Officer

Jack Hartung

He said on the call.

Chipotle's revenues increased by 7.4% in the last quarter after the fast-food restaurant chain raised menu prices. The company also opened 35 new restaurants and saw a 2.2% increase in sales of comparable restaurants.

Analysts surveyed by FactSet had estimated a 1.3% increase in same-store sales. First quarter revenues increased to $ 1.15 billion from $ 1.07 billion the previous year.

The Denver-based company reported a profit of $ 59.4 million, or $ 2.13 per share, compared to $ 46.1 million, or $ 1.60 per share, a year earlier. Analysts polled by Thomson Reuters had forecast earnings of $ 1.57 per share on $ 1.15 billion in revenue.

By 2018, the company said it expects comparable restaurant sales to increase in the single digits. It also expects to open between 130 and 150 new restaurants.

Write to Julie Jargon at julie.jargon@wsj.com and Aisha Al-Muslim at aisha.al-muslim@wsj.com

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