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Chipotle is optimistic the pandemic is 'in the rearview mirror'

Buoyed by strong Q4 sales, the chain is plotting aggressive new unit growth but is still hampered a bit by delivery margins.
Chipotle Mexican Grill
Photo: Shutterstock

Chipotle Mexican Grill has aggressive plans for new unit growth and is optimistic that the pandemic is “in the rearview mirror,” CEO Brian Niccol told analysts late Tuesday while releasing the chain’s fourth quarter earnings figures.

The fast-casual’s total revenue grew 11.6% to $1.6 billion for the quarter ended Dec. 31, with same-store sales increasing 5.7%. Digital sales climbed 177.2% and made up nearly half of all transactions.

January’s same-store sales were up 11%, leading Chipotle to predict Q1 same-store-sales growth in the mid- to high teens.

“January is a great example of the strength of Chipotle’s business,” Niccol said. “We’re still being impacted by COVID, rolling over a year ago that didn’t have COVID.”

Much of that growth is due to “new access points,” he said, including the chain’s wildly successful order-ahead Chipotlanes.

Stores with Chipotlanes continue to bring in 10% more revenue than those without. Of the company’s 161 new locations in 2020, 100 included Chipotlanes. Chipotle had a total of 170 of the order-ahead drive-thrus, out of its 2,768 units, at the end of the year.

More than 70% of new Chipotles built this year will include Chipotlanes and 10 to 15 locations will be renovated or moved to tack them on, the company said. The Newport Beach, Calif.-based chain said, barring COVID-related delays, it plans on opening around 200 new locations in 2020.

The success of the Chipotlanes, coupled with growth in delivery, has helped Chipotle generate digital-only average-unit volumes of $1.1 million.

For Q4, restaurant operating margin was 19.5%, an increase of 30 basis points year-over-year. Last quarter, Chipotle executives noted operating margins were 19.5%, down from 20.8% over the previous year. Higher delivery costs associated with increased delivery sales were cited as the main reason for the decline.

To make up that shortfall, Chipotle has been tinkering with pricing on the delivery menu. It now averages 13% higher than the non-delivery menu.

“It’s an ongoing process,” Niccol said. “It’s a fluid process. We’re not done working on it.”

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