You can be sure that burrito-craving freeloaders will be lining up at Chipotle Mexican Grill (NYSE:CMG) come Monday. The market darling in fast casual will offer anyone placing an order with Sofritas as its primary protein a voucher that can be used for any free burrito, bowl, salad, or order of tacos in the coming weeks.
Social media is playing up Jan. 26 as a day for free burritos, though technically it's not. Customers will pay for their Sofritas bowl, burrito, salad, or order of tacos that day just to get a voucher they can redeem starting the next day through Feb. 27. It's more like a BOGO, but even then folks have to come back for the free meal. Buy One Get One Later? BOGOL?
Investors following Chipotle know this is probably the last chain that would need to offer free food to get customers through its doors. Stop by your local Chipotle and there's probably a queue snaking around inside. This is usually the case even when it's not peak lunch or dinner time.
Chipotle's cult-fave status isn't a matter of opinion. The unit-level economics bear that out. Comparable-restaurant sales are routinely positive, and since the start of 2013 that growth has actually accelerated.
- Q1 2013: 1.1%
- Q2 2013: 5.5%
- Q3 2013: 6.2%
- Q4 2013: 9.3%
- Q1 2014: 13.4%
- Q2 2014: 17.3%
- Q3 2014 19.8%
Now it bears pointing out that the two most recent quarters were peppered with a springtime pricing increase to combat cost inflation, Chipotle's first major menu board update in three years. Its guidance for the year ahead calls for comps to improve at a more modest rate in the low- to mid-single-digits.
Nonetheless, customers keep coming to the fast-growing burrito roller that is now up to 1,724 eateries. In short, this is more about drawing attention to a relatively new item on its menu than it is a publicity stunt to drum up store traffic.
So what exactly is Sofritas? Well, it's seasoned chunks of organic tofu braised with chipotle chilis, roasted poblanos, and other spices. It's not the first vegan-friendly item on the Chipotle menu, which has always offered a meatless veggie burrito option. However, Sofritas should appeal to vegetarians looking for a more substance in their bowls, and even carnivores might appreciate a new taste that just happens to be lower in saturated fat, calories, and cholesterol than Chipotle's other meaty choices.
Chipotle began testing Sofritas in some markets in 2013 before rolling it out nationally last year. Drawing attention to the offering makes sense, especially given the recent carnitas shortage that shut out pork lovers at a third of its restaurants.
Chipotle doesn't need Sofritas to be a hit to succeed. Analysts see revenue growing by 17.5% in 2015, fueled by another year of positive comps and brisk expansion. The wiggle room provided by last year's menu price increase and the scalable nature of the Chipotle model find those same Wall Street pros eyeing earnings growth of nearly 25% for the year. It would be great if the company can turn seasoned tofu into another magnet for customers, and that's why Monday's "free" stunt bears watching. Chipotle is running on all cylinders right now. Just imagine how long the lines can get if it gets another cylinder going.