The Newport Beach, Calif.-based chain is quickly expanding its order-ahead Chipotlanes, with plans to open them at more than 70% of new locations built this year. So, Chipotle is looking at a number of ways to either make delivery more profitable or to drive customers to other ordering methods. And we’re not done working it.”ĭelivery currently makes up 25% of Chipotle’s business, a channel that has seen tremendous growth during the pandemic but one that comes at a high cost to the bottom line. Learn to use this formula and you can start turning every $10,000 invested into as much as $58,700.Ĭlick here to review Louis’ urgent presentation.“It’s an ongoing process,” Niccol said. Legendary Investor Louis Navellier’s Trading Breakthroughĭiscovered almost by accident, Louis Navellier’s incredible trading breakthrough has delivered 148 double- and triple-digit winners over the past 5 years - including a stunning 487% win in just 10 months. Write him at follow him on Twitter at As of this writing, he did not hold a position in any of the aforementioned securities. He is the author of the historical mystery romance The Reluctant Detective Travels in Time available now at the Amazon Kindle store. If you’re not, I’d wait to see evidence of a turnaround before jumping in.ĭana Blankenhorn is a financial and technology journalist. If you’re in it, then, I wouldn’t give up on CMG stock. On the other hand, neither I nor anyone else following the stock has run a restaurant chain. My problem with Niccol’s plan is that it is mainly focused on expanding sales through marketing, and not on the supply chain problems that caused Chipotle’s fall in the first place. Failure to meet those targets could hit the shares hard in the near-term. High expectations are already baked-into the shares, evidenced by the earnings estimates for June.
The problem for many analysts is that Chipotle stock ran up quickly after Niccol’s hiring, and may have gotten ahead of itself. However, it’s hard to see a lot of growth during the quarter that starts in July with the company saying about 60 low-performing stores are due to close. CMG easily beat earnings estimates in that March quarter. It would also represent 13% more income than during the same time last year. That would represent about 10% top-line growth over the March quarter, albeit with warmer weather that favors Chipotle’s outdoor patio seating. How Long a WaitĬhipotle is next due to report earnings July 26, with analysts expecting about $75 million in net income, $2.71-per-share, on revenue of $1.26 billion. The crowds that once thronged stores are mostly gone. But that risked turning off consumers looking for freshly made food. Even today it’s unclear what happened in the 2015 e.coli outbreak, whether it was bad vegetables or bad meat.īefore Niccol joined, CMG had already changed parts of its supply chain to prevent future outbreaks, marinating the salads and pre-mixing the guacamole, for instance. Niccol did give analysts one thing they wanted, throwing the old management under the bus, claiming they lacked “discipline,” resulting in scandals where people got sick after eating the company’s food. The app will have a loyalty program and accept orders for delivery or pick-up. The key to this change will be the Chipotle app, which is similar to many pizza apps and a new program being launched by McDonalds (NYSE: MCD). Niccol says it will now become a full-menu Mexican-style operation with specials during low-traffic day parts. That’s a huge change for Chipotle, which rose to prominence on quick, all-natural lunch burritos delivered with a cafeteria-style line, a nutritious and filling lunch for office workers costing $10. The idea is to get in front of young consumers, to deliver what they like when and where they want it, and to build a “lifestyle brand” like Taco Bell. The ingredients in Niccol’s plan include new menu items such as quesadillas and milkshakes, more digital ordering and delivery, and a quirky ad campaign that includes sponsoring an eSports team. Niccol’s track record says it can, but it won’t happen overnight. The question is whether Chipotle can replicate that success. At its current price, investors are paying nearly 3 times revenue for the burrito chain, against four times sales for Yum! That company, however, is consistently profitable and even offers a dividend. Niccol’s hiring in February started a rally in CMG stock, the price per share rising from $255 to a recent high of nearly $470. Brian Niccol, given credit for the rise of Taco Bell within Yum! Brands (NYSE: YUM), is rolling out similar plans for Chipotle (NYSE: CMG) and analysts aren’t buying it.ĬMG stock was due to open at $428, down over 6%, on June 29 after a conference call that was long on aspiration and short on detail.
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