Chipotle burritos — not bowls — are all the rage during the pandemic: CFO
The mighty Chipotle burrito — delivered straight to your house — continues to power the restaurant giant’s profits during the COVID-19 pandemic.
It makes sense — burritos hold their heat longer than salad bowls and Chipotle (CMG) is viewed as the burrito mecca.
“The customers that are coming into our restaurants — which are about half of our customers —they are still eating the same number of burritos versus bowls as they did before. So they haven’t shifted from bowls. Bowls before the pandemic were 70% of what we sold and burritos were only 30%. That is still the relationship in the restaurant. Digital has always been more burritos than bowls. What’s happening is with more people in the digital channel, the overall burrito mix is increasing,” Chipotle’s CFO Jack Hartung explained on Yahoo Finance’s The First Trade.
Hartung credits the burrito surge to an influx of new customers ordering online amidst the pandemic. “When they come in from the digital channel, they think Chipotle stands for burritos and that’s what they start with. Secondarily, the burrito travels really well,” Hartung added.
The burrito buying binge was on full display in Chipotle’s third quarter.
Chipotle’s same-store sales gained 8.3%. Digital sales surged 202.5% from a year ago. Total revenue improved 14.1% from last year.
But Chipotle shares did come under pressure post earnings on Thursday. Sell-side analysts voiced concerns over Chipotle’’s same-store sales growth slowing to mid-single digits (percentage) in October and stubbornly high costs. Considering the stock spiked 12% ahead of earnings per Yahoo Finance Premium data, it’s unsurprising that slight disappointments on various estimates would be met with selling pressure.
“3Q same-store sales above consensus but likely below lofty investor expectations, and 4Q-to-date same-store sales of up mid-single-digit percentage also disappointing. We expect a reset on near-term comp [sales] estimates,” said Jefferies restaurant analyst Andy Barish.
Hartung reiterates Chipotle is doing just fine given the challenging external environment. He has not seen a sales pullback in locations experiencing new waves of COVID-19 infections.
“We are not seeing any pullback. We are watching it closely. We are worried of course that wave two might worsen it and have an impact on our sales. But so far, so good,” Hartung said.
Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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