Chipotle Mexican Grill's (NYSE:CMG) Chief Executive Officer Brian Niccol told Bloomberg TV in an interview yesterday he expects the burrito and taco restaurant's digital sales to reach $2.4 billion during fiscal 2020, compared to 2019's $1 billion in digital business. The main driver appears to be carryout orders placed either online or through Chipotle's mobile app.
Niccol remarked that digital sales climbed to 80% of the total during the worst of the coronavirus pandemic, but he expects "digital business is going to stay around as dining room business comes back." Overall, he forecasts digital purchases to climb to between 40% and 50% of Chipotle's sales for the year. The new range represents an increase from Niccol's earlier predictions.
The coronavirus was the clear driver of soaring digital sales, with the volume of such sales growing by 216.3% during the company's fiscal second quarter of 2020, as reported by Seeking Alpha, when the outbreak was at its U.S. height.
Of course, delivery adds considerable overhead to any order taken directly to a customer's home or workplace, which could affect the fast casual restaurant's bottom line and prices long term. Business Insider reports Chipotle has hiked its delivery menu prices by an average of 9% (out of a range of 7% to 17%) in its 20 biggest operational areas, citing Gordon Haskett research.
Business Insider also quoted Chief Corporate Affairs Officer Laurie Schalow as saying, "we're experimenting with a modest price increase to help offset costs associated with delivery."
According to Seeking Alpha data, Wall Street analysts peg Chipotle as slightly overvalued on average, with a price target of $1,261.34. Dissenter Goldman Sachs raised its price target to $1,425 today while retaining a rating of "Conviction Buy."