It was a record-breaking third quarter for Chipotle Mexican Grill.
Trials of new menu items, including a wildly popular smoked brisket LTO, coupled with robust digital sales and a recovery of in-restaurant dining led to a big quarter for the fast casual, with total revenue of $2 billion. That figure is up 21.9% over the previous year, the chain reported Thursday for the three months ended Sept. 30.
The Newport Beach, Calif.-based operator posted a same-stores sales increase of 15.1% in Q3 and said it expects to see similar results with same-store sales in the “low- to mid-double digits range” for the fourth quarter.
Digital sales made up 42.8% of all transactions. Last quarter, they accounted for 48.5% of all restaurant transactions, a number that has continued to dip as consumers increasingly return to restaurants. Digital sales, however, grew 8.6% year over year in Q3 to $840.4 million.
Chipotle opened 41 new restaurants during the period—88% of which included an order ahead-pickup Chipotlane, a channel that has proven to be very profitable for the chain. It ended the quarter with 2,892 locations.
Chipotle is currently testing smaller-footprint restaurants that include a Chipotlane, CEO Brian Niccol said during the earnings call. Those types of locations would potentially be located between two high-volume units to give customers another access point.
For the quarter, Chipotle reported restaurant level operating margins of 23.5%, an increase from 19.5% during the same period last year. The burrito chain attributed the boost to leverage from same-store sales increases, as well as menu price increases. Higher wages and soaring costs of beef and freight offset those gains.
In July, Chipotle reported its highest profit margins since its food safety crisis in 2015. Those restaurant-level operating margins were 24.5% for Q2.
Niccol told analysts Thursday that he expects those restaurant operating margins to climb several more percentage points—he’s just unsure when that might happen.
“We still believe that kind of margin range is still very much in play,” Niccol said. “It’s very much of a labor challenge. There’s food inflation. We don’t know how much of this is temporary or transitional versus permanent … We’ll be very patient.”
Chipotle launched a smoked brisket LTO a month ago. The new protein has “driven incremental transactions” as well as higher check averages, Niccol said. The success of smoked brisket is pushing the chain to end the LTO later next month, a bit earlier than planned.
“I’m guessing we’ll probably do brisket again in the future,” Niccol said.
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