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Chipotle Management Talks Potential New Menu Items, Digital Sales, and More

By Daniel Sparks - Aug 21, 2019 at 7:31AM

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Here are three must-see quotes from the fast-casual chain's second-quarter earnings call.

Chipotle Mexican Grill (CMG 1.75%) has impressed investors in 2019, building on the momentum it saw last year. The company has notably achieved six consecutive quarters of accelerating comparable sales, with second-quarter comps coming in at 10%. Helping drive the fast-casual chain's results are revitalized efforts in marketing, restaurant efficiency, and digital.

To better understand what's behind the company's strong performance and its opportunities ahead, investors can turn to management's second-quarter earnings call. Though the call included lots of insightful information, three topics discussed during the call that are worth a closer look are Chipotle's rewards program, its digital sales, and management's teaser of potential new menu items.

Here are three key quotes from management on these topics.

Chipotle online order bag

Image source: Chipotle.

Digital sales are soaring

Since Brian Niccol took the reins early last year as Chipotle's new CEO, the company has been relentlessly capitalizing on digital opportunities. Chipotle's efforts in digital have been broad-based, including streamlining online ordering, delivery, and catering, as well as improving the mobile app and launching a rewards program.

These efforts are helping digital sales climb sharply.

"Our customers are responding positively to our digital system, ... as it reduces friction and creates a convenient and enjoyable way for our guests to experience Chipotle," explained Niccol in Chipotle's second-quarter earnings call. "Overall, digital sales grew 99% year over year to $262 million during the quarter and represented 18.2% of sales."

Chipotle's rewards program is paying off

One aspect of Chipotle's digital efforts worth calling out is its recently launched rewards program. Debuted in March, the program has already garnered five million members, Niccol said. In addition, the program is quickly morphing into a catalyst for Chipotle's business.

"Early results are showing that members are increasing their frequency after joining the program," said Niccol. "The rewards program gives us a currency that we can use to incent behaviors and is a key enabler of our digital ecosystem moving forward."

Chipotle teases new menu items

Another way Chipotle is trying to improve its business is by innovating with menu items. To this end, the company announced "Lifestyle Bowls" in January. These bowls cater to different popular diets such as paleo and keto diets. The new menu items have been popular with customers. Chipotle has also been testing quesadillas, which are cooked in new ovens. This pilot has received positive feedback from customers.

Of course, Chipotle doesn't plan on stopping here. It wants to keep innovating with menu items. "The new ovens are helping to improve the quality and taste of the quesadillas and could potentially be a platform for other new menu items including desserts and nachos," said Niccol.

But investors shouldn't expect many meaningful changes to Chipotle's menu in the near term. The company wants to ensure it isn't sacrificing throughput for the sake of new items. "[W]e still have some work to do in order to streamline our workflow," Niccol added.

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