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Why Chipotle Mexican Grill's Stock Surged 25.7% in the First Half of 2020

By Royston Yang – Jul 9, 2020 at 12:05AM

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The popular restaurant chain has announced a tie-up to expand its delivery footprint.

What happened

Shares of Chipotle Mexican Grill (CMG -0.05%) rose 25.7% in the first six months of 2020, according to data from S&P Global Market Intelligence.

The shares were down briefly in March, in line with the overall market, but have since recovered all their losses to hit new all-time highs in June.

Tacos sitting on a wooden block

Image source: Getty Images.

So what

The COVID-19 pandemic had spread rapidly in the U.S. and around the world, forcing governments to implement stringent lockdowns and movement control restrictions. Dine-in at food and beverage outlets was prohibited and only take-away and drive-through were allowed. Chipotle, however, was an exception. The company only closed around 100 restaurants back in March, and these are the ones located within malls and shopping centers. The closures represented just 3.8% of the company's total store count of 2,638 as of March 31.

There's more good news. Brian Niccol, CEO of Chipotle, mentioned in the company's earnings call that the majority of the company's restaurants are open for to-go orders. The company had the foresight to put its digital platform in place over the last two years and is now successfully leveraging on it to generate sales. For the first quarter, digital sales were up an impressive 81% year over year and made up 26% of total sales.

Now what

It appears that Chipotle has managed to successfully navigate the pandemic by relying on its digital platform. The company also announced a partnership with Grubhub (GRUB) to expand its delivery footprint in the United States. Customers can use make use of the Grubhub app to order from Chipotle for fast and efficient delivery.

These savvy initiatives will surely bode well for the company's long-term growth. Chipotle has demonstrated both resilience and resourcefulness in ensuring that its business operations are minimally affected by the coronavirus, and investors have a lot to cheer about as the company continues to report impressive numbers.

Royston Yang has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Chipotle Mexican Grill. The Motley Fool has a disclosure policy.

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