Shares of Chipotle Mexican Grill (NYSE:CMG) were heading lower last month as the burrito roller took a hit from the coronavirus crisis. Like the broader restaurant industry, Chipotle was forced to limit itself to takeout and delivery in a number of key markets, and with millions of Americans working from home, the company will lose most of its business at its downtown locations.
Nonetheless, the stock fared better than most of its peers, a sign of investor confidence in the burrito chain. According to data from S&P Global Market Intelligence, the stock finished March down 15%, which was only slightly worse than the performance of the S&P 500, as you can see from the chart below.
Unlike some other restaurant chains, Chipotle has not yet provided an update on the business, nor has it suspended its financial guidance for the year as many of its competitors have. However, the company did say on March 12 that it would offer free delivery through March to encourage customers to continue ordering from the restaurant as it became more difficult to visit its locations. On March 18, Chipotle followed that up by saying that it partnered with Uber Eats to expand its delivery reach.
The company had already invested significantly in digital ordering and delivery, giving it a leg up over some of its competitors during a time when eat-in dining is restricted, and that might be one reason the stock only fell modestly last month. In its most recent quarter, digital sales accounted for 20% of its total.
Chipotle has extended its free delivery offer through April and also said it would provide up to 50,000 free burritos for healthcare workers in support of the fight against COVID-19.
Investors should expect its financial results to be muted as long as stay-at-home orders are in effect around the country. But the company is still in a better position than many of its peers, as it also has no debt and a strong balance sheet, with $481 million in cash. Chipotle could even emerge from the crisis in a stronger position, since a number of restaurants could be forced to close permanently, allowing the company to grab market share.