News

Chipotle's digital sales climb 66 percent

February 7, 2019

Chipotle Mexican Grill reported late Wednesday afternoon that its efforts in digitizing its restaurant experience is paying off as revenue increased 10.4 percent to $1.2 billion and that same-store sales were up 6.1 percent in fourth quarter, ended Dec. 31, 2018.

"I'm very pleased to report strong fourth quarter results with 6.1 percent comparable restaurant sales growth that included 2 percent transaction growth. For the full year, Chipotle's average unit volumes exceeded $2 million with digital sales surpassing half a billion dollars," CEO Brian Niccol said during an investor call. "The growth acceleration this quarter gives us confidence that our strategy is working."

That strategy includes a continued focus on digitizing and modernizing the restaurant experience with enhanced access and less friction, Nicool said. For example, the chain added digitized make lines in more than 1,000 restaurants last year and will implement them in the rest by the end of  2019. It also deployed digital pickup shelves in 1,000 restaurants and is planning to roll them out in all locations by the middle of 2019.

Those operational changes helped to increase digital sales 66 percent year-over-year, which hit $158.6 million during the fourth quarter. They represented 12.9 percent of sales an acceleration from 48 percent in Q3.  

"For the full year, digital sales exceeded a half a billion dollars and accounted for 10.9 percent of sales," Niccol said. "App downloads increased 72 percent year-over-year in 2018 and we continue to see strong interest from new infrequent as well as frequent guests at Chipotle."

Delivery is also a key area for the chain, which saw sales increase 13 times compared to the fourth quarter of 2017. 

"As we continue to remove friction from the digital ordering and pickup process, we expect our delivery time advantage to continue to widen," Niccol said. "Based on data shared with us by our white label delivery partner, we are consistently among the quickest delivery times in their system and we expect this to only get better with the addition of pickup shelves and delivery prepay capabilities that enable delivery drivers to walk in, pick up their order, and walk out without any delays."

The chain has also been testing a mobile order pickup lane  — Chipotlane — in 10 units, which  have seen a mix of digital sales and total restaurant sales, said Niccol

"We'll continue to explore and learn about this opportunity by opening a few dozen more Chipotlanes in 2019 with a mix of freestanding and end cap buildings," he said. "These restaurants are a great extension of our digital system as they help to increase convenience and access to Chipotle."

Fourth quarter highlights, year over year, include:

• Comparable restaurant sales increased 6.1 percent, which included 2.0 percent of comparable restaurant transactions growth.
• Digital sales grew 65.6 percent and accounted for 12.9 percent of sales.
• Restaurant level operating margin was 17.0 percent, an increase from 14.9 percent.
• Diluted earnings per share was $1.15, a 25.8 percent decrease from $1.55. Adjusted diluted earnings per share was $1.72, excluding the impact of restaurant closure costs, corporate restructuring, and certain other costs, a 11.0 percent increase from $1.55.1.
• Opened 40 restaurants and closed or relocated 12.

Fullyear 2018 highlights, year over year:

• Revenue increased 8.7 percent to $4.9 billion.
• Comparable restaurant sales increased 4.0 percent, net of a 0.8 percent decline in comparable restaurant transactions.
• Digital sales grew 42.4 percent and accounted for 10.9 percent of sales.
• Restaurant level operating margin was 18.7 percent, an increase from 16.9 percent
• Diluted earnings per share was $6.31, a 2.3 percent increase from $6.17. Adjusted diluted earnings per share was $9.06, excluding the impact of restaurant closure costs, corporate restructuring, and certain other costs, a 33.0 percent increase from $6.81. 1.
• Opened 137 restaurants and closed or relocated 54.