Chipotle jumps 11% on earnings beat as price hikes at the fast-casual chain help offset inflation pressures

• Chipotle climbed 11% during Wednesday's session after the restaurant chain's Q4 earnings report.
• Adjusted earnings of $5.58 a share surpassed the $5.25 expected in a FactSet survey of analysts.

Chipotle stock climbed Wednesday after the Mexican food chain was able to pass price increases to its customers during the fourth quarter, helping offset pressures from higher food costs and deliver earnings that surpassed Wall Street's target.

The stock gained as much as 11% when it hit an intraday high of $1,616, the highest price in nearly five weeks. The advance was later trimmed to 7%. The shares this year through Tuesday's session had dropped by 16%.

The shares rose after the company late Tuesday reported adjusted earnings of $5.58 a share, a jump from $3.48 a year ago and above the $5.35 a share expected in a FactSet survey of analysts. Revenue rose 22% to $1.96 billion, in line with expectations.

Chipotle was able to beat Wall Street's earnings target in the face of higher costs for food, beverages and packaging. Those costs were 31.6% of the company's total quarterly revenue, up 60 basis points compared with the year-earlier period.

"The increase was due primarily to elevated inflation on beef and freight, and to a lesser extent, avocado costs that more than offset the leverage from menu price increases," Chipotle said in its earnings report.

Chipotle in December raised its menu prices by 4% and had raised prices during 2021 as it increased wages for employees.

The company is likely to raise prices again this year as inflation persists, CEO Brian Niccol told The Wall Street Journal.