Chipotle Mexican Grill posted double-digit same-store sales growth for the second quarter —the fast-casual chain’s sixth consecutive quarter of accelerating comps—and CEO Brian Niccol offered this simple message in response:
“This is just the beginning,” Niccol said during a call with analysts late Tuesday.
For the quarter ended June 30, Chipotle’s revenue increased 13.2% to $1.4 billion, while same-store sales grew 10%. Traffic jumped nearly 7% for the period.
Perhaps most relevant to the Newport Beach, Calif.-based brand’s promise of future growth are its digital sales metrics for the quarter. Digital sales grew 99.1% during the period, accounting for 18.2% of total sales. Some 5 million customers are now part of Chipotle’s rewards program, which has seen steady growth since its March launch.
“To put this in perspective, this is more than we did in digital sales during all of 2016,” Niccol said.
About 16 Chipotle stores now have mobile-order pickup lanes, which the company calls “Chipotlanes,” and 95% of all units currently support delivery. Those drive-thrus, coupled with other order-ahead and digital efficiencies, are driving sales in a big way, he said.
“We’ve added another access point for people that order ahead,” he said, according to a Sentieo transcript. “And what I’m delighted about is we see places where you’re seeing the digital business achieve 30% and north of 30% and it is driven by just giving more access, building more awareness and giving them great experiences. So, we definitely are not, we think, at the top of where this is. We think there’s still lots of room for growth in all aspects of the digital business.”
Catering remains a major area of opportunity for Chipotle, Niccol said.
Chipotle, long reluctant to add new items to its concise menu, is now looking to drive traffic with menu innovation. The burrito-and-bowl brand is eyeing a national launch of carne asada and is in the midst of testing quesadillas. The quesadilla platform may lead the way for nachos and dessert offerings in the future, Niccol said.
“We still have some work to do in order to streamline our workflow,” he said. “We are not going to roll out new menu items at the sacrifice of throughput.”
Perhaps the only dark spot in Chipotle’s latest earnings report can be blamed on avocados. Chipotle’s Q2 food costs were 33.7%, an increase of 110 basis points year over year, due in large part to rising avocado prices.
Earlier this month, Chipotle’s stock hit an all-time high of $759 per share, rebounding after a foodborne illness crisis several years ago sent shares plummeting.
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