Chipotle’s same-store sales surge, thanks to digital

Online and mobile orders doubled in the first quarter as the company’s comparable-store sales rose 9.9%.
Photograph courtesy of Chipotle Mexican Grill

Chipotle Mexican Grill on Wednesday said its same-store sales rose 9.9% in the first quarter ended March 31 as consumers continued to flock to the chain’s online and mobile ordering offerings.

Digital sales doubled last quarter, the company said, and represented 15.7% of sales in the period.

Chipotle said its restaurant-level margins were 21%, up 150 basis points from a year ago and the best performance in that key metric in four years, CFO Jack Hartung told investors Wednesday afternoon.

The same-store sales performance also represented the fifth straight quarter of accelerating same-store sales, CEO Brian Niccol said.

The result reinforces “our view that when we connect with guests through culturally relevant marketing focused on Chipotle’s great taste and real ingredients and provide more convenient access with less friction, they respond enthusiastically,” he said.

The results led the company to increase its expectations for same-store sales this year, to “mid- to high” single digits from mid-single digits.

Chipotle’s same-store sales came largely on the basis of transactions, which increased 5.8% in the quarter, executives said.

Chipotle was particularly aggressive in its digital promotions in the period. The company began the quarter with a free delivery promotion, in which half of the customers using the service were new or lapsed users who continued to eat at the chain later in the period, Niccol said.

The company also introduced its first digital-only offering, called Lifestyle Bowls, a line of bowls aimed at lifestyle dieters, that helped the chain generate 1 million media impressions after its introduction.

In addition, the chain added a permanent loyalty program in the quarter, and Niccol said it continues to find ways to make the chain more convenient—it is expanding its mobile-order drive thru test, called Chipotlanes, and also expects to have mobile order pickup shelves in all locations in the period.

The shelves are a “key ingredient to improved pickup times,” Niccol said on the earnings call. “Instead of waiting in line, they can go to the shelf, pick up the appropriate order, and head on their way.” He said the shelves are giving the company “industry-leading delivery times” that executives believe are key to more delivery sales.

Hartung said that delivery is the fastest-growing part of Chipotle’s business, with “high incrementality,” and said the company’s digitized second make line enables the company to serve those customers more profitably.

Revenues at Chipotle increased 13.9% in the quarter to $1.3 billion. Net income rose 48% to $88.1 million, or $3.13 per diluted share, from $59.4 million or $2.13 a year ago.

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