Chipotle 1Q Sales Rise Fueled By Record Digital Sales Growth


Chipotle Mexican Grill Inc. (CMG) saw its first-quarter restaurant sales advance 3.3% as the food chain reported a record quarter in digital sales growth.

First-quarter revenue rose 7.8% to $1.4 billion from the same quarter a year ago, driven by a 3.3% increase in comparable restaurant sales. Digital sales jumped 80.8% year-on-year to a record $371.8 million and generated 26.3% of sales.

Although comparable restaurant sales declined 16% in March as coronavirus-related lockdown orders forced the closure of many of its restaurants, the company’s digital sales soared 102.6% year-on-year and represented 37.6% of sales.

“Investing in digital over the last several years has allowed us to quickly pivot our business with Q1 digital sales reaching our highest ever quarterly level of $372 million,” said Brian Niccol, Chairman and CEO at Chipotle. “Our strong brand, business model and balance sheet give us the confidence to not only weather this downturn but continue to judiciously invest in key areas so that when we come out the other side, we will emerge even stronger.”

After Chipotle’s dining rooms shut down to help contain the spread of COVID-19, the company shifted investments towards digital and delivery services designed to reduce friction while increasing convenient access. This included offering free delivery from March 15 to at least early May, shifting media spend from live sports to more online and streaming platforms, and announcing a national delivery partnership with Uber Eats.

Looking ahead, Chipotle is withdrawing its 2020 fiscal guidance due to uncertainty about the future impact of COVID-19 on the US economy.

Piper Sandler analyst Nicole Miller Regan on Wednesday maintained her Buy rating with a $850 price target, saying the stock remained her highest conviction investment recommendation. Regan added that the earnings offer “compelling evidence” that a strong presence in the digital and delivery channels are great assets in the current environment.  Five-star analyst Brian Bittner at Oppenheimer kept his Hold rating on Chipotle stock. Shares rose as much as 7% in U.S. post-market trading after the stock yesterday closed at $786.69.

Wall Street analysts have a Moderate Buy consensus rating for Chipotle split into 14 Buys, 12 Holds and 1 Sell. The $843.88 average price target implies 7.3% upside potential from current levels. (See Chipotle stock analysis on TipRanks).

As of the end of March, Chipotle had $909.2 million in cash, restricted cash, and short-term investments and no debt. In addition, the company said it expected to see a $100 million liquidity benefit primarily from deferring social security tax payments and accelerating tax depreciation in previous returns as allowed by the U.S. CARES Act.

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