We're finally nailing down the key players for Super Bowl LIV, which will take place in two weeks. You're going to have the defending champion Kansas City Chiefs in a quest to retain the crown. You also have Tom Brady coming back to the big game, only this time wearing a new jersey with the surprising Tampa Bay Buccaneers. Finally you have Chipotle Mexican Grill (NYSE:CMG) looking to make a big play in the second quarter with the whole country watching.
Chipotle? Yes. The fast-casual chain announced on Monday that it will air its first Super Bowl commercial just before halftime of the Feb. 7 Super Bowl game. Ads aren't cheap for what will be the most-watched TV event of the year. Super Bowls account for 29 of the 30 highest ratings in the country. That 1983 tearjerker of a M*A*S*H finale remains the lone outlier in that list.
Now could be a good time to dive into how marketers realize that live sporting events continue to transcend the cord-cutting revolution and how consumers are shifting to on-demand viewing habits, but let's get back to Chipotle here. Why is it spending big bucks on a Super Bowl commercial? Does it really need the promotional pop? Let's sink our teeth into this one, paying extra for guac and all.
Ads with integrity
One might think that Chipotle would use what should be a nine-figure audience to promote something new. It recently introduced cilantro-lime cauliflower rice as a grain substitute. It's also likely to go national at some point this year with a Mexican-spiced beef brisket that it's been testing out in some locations. However, Chipotle is playing it safe. The new spot features a young boy talking to his older sister about how a burrito can change the world by inspiring more eco-friendly farming and logistics practices.
The spot itself won't surprise Chipotle fans. The chain posted the entire 30-second ad on its YouTube channel on Monday. It's not going to top the list of the funniest or most memorable Super Bowl ads that air in two weeks, but that's also part of the point. The ad itself is as "on brand" as one would expect out of Chipotle, and it will still get noticed without being splashy like many of the over-the-top ads that will debut that night.
Chipotle Mexican Grill certainly doesn't need the Super Bowl exposure. It's doing just fine on its own. It's one of the rare chains to post positive year-over-year comps growth for the third quarter of last year. It should post another strong report when it offers up its fourth-quarter results next week.
Digital sales tripled in its latest report, fueled by the concept's success with third-party delivery apps as well as its own mobile ordering platform. Digital sales now account for nearly half of the chain's revenue. Everybody has the same access to these revenue streams, but here's where Chipotle's strong brand is paying off. It's succeeding at a time when most concepts are sputtering, and this may be as good a reason as any to keep reminding hungry consumers -- nearly halfway through the Super Bowl -- that Chipotle is different. It managed to make it through the pandemic by posting a single quarter of negative comps, a 5% decline in the second quarter. It has now posted positive store-level sales in 10 of the last 11 quarters.
Chipotle is a growth stock in an industry where a lot of chains are proving mortal in the new normal. A low-key commercial spot in a high-profile game works just fine for a company that doesn't need fixing.