Chipotle Mexican Grill reports Q4, fiscal 2020 results, a tripling of digital sales
Chipotlane stores more than doubled and now total 170 units within portfolio
Chipotle announced another strong quarter, with revenue increasing 11.6 percent to $1.6B and comp(arable) sales increasing 5.7 percent in its Q4 2020. The Newport Beach, Calif.-based Mexican-style chain continued to benefit from a strong digital platform and continued menu introductions. Digital sales nearly tripled, increasing 177.2 percent, making up nearly half of all sales.
A relaunch of Carne Asada is expected to continue through early March, noted Brian Niccol, Chipotle chief executive, during a call with analysts. The mix during the relaunch has been consistent with Carne Asada’s initial performance.
The fast casual also introduced Cilantro-Lime Cauliflower Rice for a limited time to all stores. In addition, Quesadillas and Smoked Brisket are also being tested in select markets and showing “encouraging results.”
Costs upticked a bit and restaurant level operating margin dropped to 19.5 percent of sales. Adjusted diluted earnings per share was $3.48, a 21.7-perent increase from the previous year’s fourth quarter.
Digital initiatives have meant that the 2,750-unit chain is reflective of certain tents of the restaurant of the future: customization and frictionless ordering. Average-store AUV now stands at $1.1M and Chipotle is moving forward with its Chipotlane (order-ahead drive-thru) stores and a digital-only store prototype being tested outside of West Point.
A total of 42 of the 61 new stores that opened in the fourth quarter included a Chipotlane. At the end of the year, there were 170 Chipotlane stores. In 2020, 62 percent of new stores that opened had a Chipotlane, with the chain targeting about 70-percent of future openings to have a Chipotlane.
Stores with Chipotlanes are higher-margin restaurants, outperforming traditional restaurants and generating a 10-percent higher mix of digital sales. Chipotlane stores also tend to be higher grossing stores and their bottom line is boosted by higher-margin digital pickup orders.
Delivery order prices are about 13 percent higher, according to an analyst call; price increases and surcharges are fluid as Chipotle continues to test higher digital prices and fees. A carside (curbside) pickup test in San Jose is also underway, with Niccol suggesting initial feedback is positive.
Chipotle’s performance on the digital front and its contribution to employee welfare, growth and health have been monumental in helping the fast casual recover lost sales from the initial pandemic closures and lockdowns. Total sales increased by 7.1 percent from last year to $6B and comp sales increased 1.8 percent, putting Chipotle above last year’s levels.
Digital sales represented 46.2 percent of total year sales, growing 174.1 percent. Adjusted diluted earnings per share totaled $10.73, 23.6 percent lower than prior year. Chipotle opened 161 new restaurants, including six relocations, also closing nine.
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