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Digital Sales Help Propel Chipotle to Q3 Beats

By Eric Volkman – Updated Oct 22, 2020 at 7:40AM

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Digital really did it for the restaurant chain operator during the quarter.

Chipotle Mexican Grill (CMG 2.25%) released third-quarter figures after market close on Wednesday, and they showed impressive growth in certain line items.

Revenue came in at $1.60 billion, 14% higher on a year-over-year basis. This was on the back of a more than 8% rise in same-restaurant sales. As for profitability, adjusted net income was $107 million ($3.76 per share), down 1% from the corresponding period of 2019.

One burrito stacked atop another.

Image source: Getty Images.

On average, analysts tracking the stock were anticipating $1.59 billion on the top line, and an adjusted per-share net profit of $3.47.

In terms of revenue components, the single one that stood out for its growth was digital sales; these grew by almost 203% year over year to $776 million, which comprised almost half of Chipotle's total Q3 take. Not surprisingly in the age of the coronavirus, roughly 50% of all digital sales came from delivery orders.

This is a bit of a problem, as Chipotle pays out more in fees to its delivery partners than it collects from customers. Nevertheless, it was a major reason the overall top line grew at that double-digit rate.

The company also touted its up-and-coming Chipotlanes, i.e., the drive-thru, pickup-only facilities it is continuing to roll out. "These formats continue to perform very well and are helping enhance guest access and convenience, as well as increase new restaurant sales, margins, and returns," Chipotle wrote in the earnings release. During the quarter, 26 of the 44 restaurants opened by the company contained a Chipotlane.

The company did not proffer any guidance, citing uncertainty about how the pandemic will continue to impact its business.

Eric Volkman 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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