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Chipotle Speeds Up Its Expansion Plans After Posting Rebounding Sales Growth

By Demitri Kalogeropoulos – Jul 22, 2020 at 5:18PM

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The tex-mex specialist got back to increasing sales in the month of June.

The COVID-19 pandemic severely strained Chipotle's (CMG 2.27%) business, but it has already recovered from the hit. The fast-casual chain on Wednesday reported official results for the second quarter, which spanned the heavily impacted months of April, May, and June.

As expected, sales and profitability metrics each worsened. However, Chipotle had plenty of good news for investors regarding its growth rebound .

Comparable-store sales fell 9% for the full period, and operating margins dove to 12.2% of sales from 20.9% a year ago. But sales in the digital channel jumped 216% in Q2, management said, which helped offset plunging in-store traffic due to temporary closures. Chipotle noted improved customer satisfaction with its e-commerce delivery system, which is getting help from third-party aggregators today.

A man holding to-go food.

Image source: Getty Images.

CEO Brian Niccol and his team said that overall growth trends improved significantly as the quarter progressed, with 24% sales declines in April giving way to a 7% drop in May. The company then returned to a modest 2% growth uptick in June.

That increase has executives feeling confident in their growth plans that lean more heavily on digital ordering and the addition of new drive-through services. Chipotle also believes the impending shake-out in the industry will free up premium retail space, and so the chain expects to accelerate its planned new unit launches in 2021.

Demitrios Kalogeropoulos owns shares of Chipotle Mexican Grill. The Motley Fool owns shares of and recommends Chipotle Mexican Grill. The Motley Fool has a disclosure policy.

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