Chipotle revamps five strategies

Chipotle revamps five strategies

NEWPORT BEACH, CALIF. — A little less than four years ago, Chipotle Mexican Grill Inc. unveiled plans to execute a growth driven turnaround centered on five focus areas to drive sales and transactions. Now, the quick-service restaurant chain is revamping those focus areas to reflect its transition from a turnaround phase to a sustainable growth phase.

Most of the focus areas are similar to the strategies of four years ago, in a few cases worded slightly differently to reflect Chipotle’s growth. But a new focus area for the company as it enters the sustainable growth phase is expanding access and convenience by accelerating new restaurant openings.

Brian R. Niccol, chairman and chief executive officer of Chipotle, said expanded access and convenience is the No. 1 request from consumers. To that end, he said Chipotle believes that over the long term it can operate at least 7,000 restaurants in North America, up from its earlier goal of 6,000. Chipotle opened 215 new restaurants in 2021, bringing its total restaurant count to 2,966.

Mr. Niccol said the revised restaurant outlook reflects success of small-town opportunities that are delivering unit economics at or better than the company’s traditional locations.

“We’re also in the early stages of testing alternate formats, including seam locations, which, if successful, could further expand our addressable market,” he said during a Feb. 8 conference call with analysts to discuss fiscal 2021 results. “Additionally, given healthy and improving cash-on-cash returns, we are building a real estate pipeline that will allow us to accelerate new unit growth to be in the range of 8% to 10% per year, with greater than 80% of new restaurants having a Chipotlane. And of course, we continue to look for ways to enhance convenience with Chipotlanes, alternative formats, delivery and catering to provide many ways for our guests to Chipotle.”

A focus area that won’t change but that has taken on greater importance is providing a relevant and engaging brand, a strategy that involves innovation. In 2021 Chipotle launched cauliflower rice, quesadillas and smoked brisket. Mr. Niccol said all three new items performed “very well,” driving an increase in both check size and transactions.

So far in 2022 Chipotle has launched plant-based chorizo, and future plans include the debut of pollo asado, which Mr. Niccol said will be the first menu innovation with chicken in the company’s 28-year history.

The other three key focus areas for Chipotle moving forward include providing great food with integrity while delivering exceptional in-restaurant and digital experiences, developing and retaining diverse talent at every level, and amplifying technology to drive digital growth and productivity.

Net income at Chipotle in the year ended Dec. 31, 2021, was $652.98 million, equal to $23.21 per share on the common stock, up 84% from $355.77 million, or $12.74 per share, in fiscal 2020. Revenues increased 26% to $7.55 billion from $5.98 billion.