Let's talk operating margins and avocados? Chipotle's (CMG) quarterly results seem to give a pulse on Americans willingness to spend. Here's why and here's what you need to know ahead of fourth quarter earnings results. 1. Foot Traffic: A business that prides itself on pricing power has proven it's not just big talk. Last time out, it reported quarterly same store sales growth of 5%. Despite a tricky consumer landscape, last quarter's numbers told the story of a strong customer base willing to splurge a little extra even in the era of elevated inflation. Let's see if restaurant sales growth lands in mid to high single digit range for Q4 and the full year as guided by the business. Now, CEO Brian Nicholas called the value proposition of the company "stronger than ever" and the proof, it's in the burrito bowl. 2. Pricing: Think of Chipotle as the other great American institution that was pausing hikes last year. The burrito maker held off on raising prices for over a year, and then in October, it bit the bullet amid still elevated inflation. That strong report was boosted by the feed through of earlier price hikes, which offset increases in some key ingredients like beef and queso. Even though inflation is heading back down to target, keep an eye out on all those important input costs. 3. Expansion & Innovation: If history is any guide, price hikes can be absorbed easily. But you need to keep things fresh to keep people coming back. That's why the likes of the carne asada and chicken al pastor gave customers some variety they shouted out last year. We'll keep an eye out for any limited time offerings in the near future. What about those new restaurants? Could there be as many as 300 new locations in the coming year? Look out for updates on plans to open 7,000 restaurants in North America. As far as the analyst community: Citi analyst John Tower told Yahoo! Finance the company is likely going to continue to see share gains. Shares have been on a good run as of late, but keep your eye out on those avocado costs. About half of Chipotle's transactions includes guacamole. Price increases there might not be so great for shareholders. As always, Yahoo! Finance is across the report with everything you need to know.
