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Chipotle's Digital Sales Are Still Soaring Despite a Reopening Economy

By Daniel Sparks - Updated Apr 24, 2021 at 8:03PM

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The burrito maker is cashing in on digital channels, even as the pandemic subsides.

Chipotle Mexican Grill (CMG -1.50%) crushed analyst earnings estimates when the company reported its first-quarter results Wednesday. Though the company's strength was broad-based, one key takeaway from the period was how digital sales continued to grow rapidly, even as Chipotle was up against tough year-ago comparisons when lockdowns started in March and people turned to mobile ordering for their restaurant food.

Here's a look at Chipotle's startling momentum in digital as well as other key drivers for the fast-casual restaurant's rapid growth.

A group of people eating Chipotle at home.

Image source: Chipotle.

Triple-digit digital sales growth

2020 was a blockbuster year for Chipotle's digital sales. The company's investments in digital paid off handsomely as full-year digital sales soared 174.1%. For the full year, digital sales accounted for 46.2% of overall sales. 

Of course, investors were expecting decelerated growth in Chipotle's digital sales in Q1 as the economy began to reopen. While this did happen, the deceleration was surprisingly moderate. Digital sales during the quarter soared 134% year over year and accounted for about 50% of sales. In fact, Chipotle's digital sales during Q1 were a quarterly record.

Even more surprising, however, was Chipotle's outlook for the beginning of the current quarter. "Our digital sales are a sticky, frictionless and convenient experience as evidenced by our April digital sales mix holding around 50%," said Chipotle CEO Brian Niccol in the company's first-quarter earnings call.

Broad-based momentum

But what's great about Chipotle's business momentum is that it seems to be driven by a number of factors.

Chipotle is seeing double-digit growth in comparable restaurant sales, opening new stores at a rapid rate (it opened 40 new stores in Q1 and expects to open another 160 during the rest of the year), and regularly releasing successful new menu items. Drivers like these helped Chipotle's first-quarter revenue increase 23.4% year over year.

Chipotle's menu innovation has been particularly exciting recently. The company launched cauliflower rice in early January and quesadillas as a digital-exclusive offering on March 11. At the risk of making readers hungry, Niccol said in the first-quarter earnings call that Chipotle's quesadilla "is perfectly crispy on the outside with delicious, melted cheese on the inside." Management is encouraged by the new menu item's performance so far and expects it to remain a guest favorite in the future.

Chipotle's impressive digital momentum and excellent execution across several growth initiatives and a reopening economy set the foundation for a great year for the burrito maker.

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