Chipotle is doing pretty well in the inflation economy – even as other dining chains struggle – and that’s largely due to its loyal customers and sprawling footprint.
The Mexican dining chain reported strong second-quarter earnings on Wednesday, and said its boost in sales was due to continued demand for its chicken offerings. Shares of Chipotle initially popped 13% after hours, trading around $59.
“The second quarter was outstanding as successful brand marketing, including the return of Chicken Al Pastor, drove strong demand to our restaurants,” said Brian Niccol, Chipotle CEO, in statement. “Our focus and training around throughput paid off as we were able to meet the stronger demand trends with terrific service and speed.”
During the second quarter, visits to Chipotle jumped by about 17% when compared to the same period a year ago, according to a report from foot traffic analytics firm Placer.ai. The firm noted that visits per location increased by 9.5%. That growth rate may in part be due to the roughly 255 new locations the chain said it was on track to open during 2023, according to a 10-Q filing.
Even in the face of inflation (and higher prices), Chipotle’s customer base remains loyal, and that’s because they tend to be wealthier, more health conscious, and younger.
That’s also in spite of claims that Chipotle has been skimping on its food portion sizes, particularly for its burrito bowl offering. The debacle even prompted CEO Brian Niccol to take to TikTok to argue sizes weren’t shrinking.
The “weight debate” also garnered the attention of Wells Fargo analysts in late June, who set out to test whether the disagreement was true. They tested 75 burrito bowls and found that the bowls did vary in weight. During that time, Chipotle also said it would issue a 50-for-1 stock spilt, marking one of the largest stock spilts in the history of the New York Stock Exchange (NYSE).
For the second quarter, Chipotle modestly beat Wall Street’s expectations. The burrito maker generated $3 billion in revenue, and diluted earnings of about $0.33 a share, during the period. The Street’s analysts forecasted it would report revenue of $2.94 billion, and $0.32 earnings per share, according to FactSet.
Chipotle is eyeing more store openings. For 2024, it plans to open anywhere between 285 to 315 new locations. That’s on top of the nearly 3,500 U.S. stores it already operates. 80% of those new locations will be equipped with drive-through lanes, dubbed “Chipotlanes,” which give customers and delivery drivers the option to pick-up digital orders; the company hopes they’ll lead to “higher volumes and greater returns.”
Earlier this week, Chipotle introduced a line-up of new beverage offerings, which include popular soda brand poppi, Open Water bottles, and Coke Zero. The new items can be purchased for dine-in, takeout, and delivery, and are available at all restaurants nationwide.
