Digital Sales Push Chipotle’s Growth In Q1
Chipotle Mexican Grill (NYSE: CMG), an American chain of fast casual Mexican restaurants, announced its Q1 2019 results on April 24, 2019 followed by a conference call with analysts. The company reported revenue in line with consensus estimates at $1.3 billion in Q1 2019, which would be an increase of 13.9% on a year-on-year basis. The increase in revenue was driven by a 9.9% increase in comparable restaurant sales and new restaurant openings.. The company reported earnings of $3.18 per share in Q1 2019, higher than the $2.13 per share in the year-ago period.
We have summarized our key expectations from the earnings announcement in our interactive dashboard – What Has Driven Chipotle’s Revenues & Expenses Over Recent Quarters, And What Can We Expect For Full-Year 2019? In addition, here is more Consumer Discretionary data.
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Factors That May Impact Future Performance:
CEO Change:
- Brian Niccol joined CMG as its new Chief Executive Officer (CEO), effective from March 5, 2018. Niccol came from Yum! Brands where he was the CEO of Taco Bell. He was instrumental in implementing a successful turnaround of that business. Niccol comes with strong expertise in digital technologies, restaurant operations, and brand building, and these skills are crucial for Chipotle’s turnaround. In the 3 quarters post his arrival the company has done quite well.
Accelerating Digital Sales:
- This is the fastest growing part of CMG’s business, with annualized digital sales exceeding $0.5 billion, accounting for 10.9% of total sales in 2018. The company’s ‘Digital Pick Up Shelf’ initiative, which is now in 1000 restaurants, not only provides a faster and a more convenient experience for mobile pick up orders, it also serves as an in-store marketing tool to raise awareness among customers that they don’t have to go through the line to pick up their orders. The company plans to get them in all restaurants by the middle of 2019.
- In Q1 2019, Digital sales grew 100.7% and accounted for 15.7% of sales for the quarter showing tremendous growth potential.
New Restaurant Openings:
- CMG opened 40 new restaurants in Q4 and came to a total of 137 new openings for the full year. Moreover, the company has plans for a higher number of openings for 2019, about 140 to 155. New restaurant openings can have a significant positive impact on the company’s revenues. Meanwhile, the company is also in the process of closing 55 to 65 under-performing restaurants. In Q1 2019 the company opened 15 new restaurants.
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