Financing

Omicron dampens the end of a big quarter for Chipotle

Despite COVID challenges, the fast casual is seeing strong digital growth and is upping its new store opening projections for the future.
Chipotle Mexican Grill
Photo courtesy Chipotle Mexican Grill

It was another huge quarter for Chipotle Mexican Grill. That is, until omicron entered the picture.

Chipotle on Tuesday reported that its fourth-quarter same-store sales rose 15.2% for the period ended Dec. 31, with sales slowing near the end of December as COVID cases spiked. The COVID impact intensified in January, putting the brakes on same-store sales to an increase of 5% over the previous year.

That led the fast-casual to forecast same-store sales in the “mid- to high-single digits” for the first quarter of 2022.

For the full year, Chipotle’s same-store sales increased 19.3% and total revenue soared 26.1%, to $7.5 billion.

“Challenges create opportunities,” CEO Brian Niccol told investors Tuesday.

Digital sales remain a growth driver for the Newport Beach, Calif.-based brand—growing nearly three-and-a-half times over where they were pre-pandemic. For the fourth quarter, digital sales climbed 3.8% and made up 41.6% of sales. For the full year, digital sales accounted for 45.6% of sales.

Chipotle now has 26.5 million rewards members.

Chipotle same-store sales

That digital growth is driven in part by the chain’s growing focus on its order-ahead drive-thru Chipotlanes. During the quarter, 86% of Chipotle’s 78 new restaurants included drive-thrus. Chipotle opened 215 new locations during fiscal 2021, 81% featured a Chipotlane. The company now has a total of 355 drive-thrus in its system of 2,996 total locations.

And those Chipotlanes figure prominently in the chain’s aggressive growth plans. Chipotle revealed that it now forecasts operating at least 7,000 North American locations, up from 6,000 as long predicted. That boost is due to the chain’s recent success in small- and medium-sized towns, executives said.

Chipotle said it intends to open up to 250 new restaurants next year, with 8% to 10% unit growth going forward.

“The pipeline is very strong,” Niccol said. “We’re fortunate, people want Chipotle in their towns.”

The chain raised its prices 4% toward the end of December to keep up with rising food and labor costs. Food, beverage and packaging costs were 31.6% of total revenue in the fourth quarter, an increase of 60 basis points over the same period in 2020. That increase largely came from beef, freight and avocado costs. Chipotle has raised prices 10% over the past year, but customers are apparently willing to pay them. 

“It’s really the last thing we want to do,” Niccol said of raising prices. “We’ve seen no resistance to date with the levels we’re currently at.”

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