Chipotle makes a strong comeback

chipotle mexican grill sign

Chipotle proved today its recovery drive is finding traction, posting a same-store sales gain of 17.8% for the first quarter of 2017 and an expansion of store-level operating margins to 17.7%, compared with a figure of 6.8% a year ago.

The chain did not reveal how much of the comp gain was due to traffic gains versus price increases and changes in mix, and it readily acknowledged that comparisons were extremely easy. For the same period of 2016, same-store sales fell by nearly 30% because of a series of food safety lapses in late 2015.

But the numbers still demonstrated the metrics are moving decidedly in the right direction. Chipotle posted a net income for the first quarter of $46.1 million, compared with a net loss for the first three months of 2016 of $26.4 million.

Revenues increased by 28.1%, to $1.07 billion, helped in part by the opening of 57 restaurants. The expansion offset the closing of all 15 branches of the company’s secondary concept, ShopHouse Asian Kitchen, and one Chipotle restaurant.

Food costs also improved for the company, the result of lowering waste, which spiked in the wake of the food safety problems, and less testing to find ways of better safeguarding the supply chain. Chipotle noted that it reduced its food costs by reversing some of the supply chain safeguards it had adopted after the E.coli and norovirus outbreaks. The chain has resumed prepping lettuce and bell peppers inside stores, instead of pushing that function out to commissaries.

“By simplifying the focus in our restaurants to only those elements that lead to a great guest experience, our operations have improved every single month, which gives us confidence that we are on our way to achieve our mission,” CEO and founder Steve Ells said in a statement.


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