Chipotle Mexican Grill, Inc. (CMG) operates a major restaurant chain serving fast-casual Mexican food, including burritos, tacos, bowls, and similar dishes. The company operated 2,580 domestic locations and 39 international locations at the end of 2019. Chipotle's primary competitors include both fast food chains such as Taco Bell and other brands affiliated with Yum! Brands, Inc. (YUM), as well as fast-casual restaurants such as Qdoba Mexican Eats and other restaurants in close proximity to Chipotle locations.
- Chipotle Mexican Grill operates a chain of more than 2,600 fast-casual Mexican restaurants.
- The chain's stores are located primarily in the U.S., with a small number of international locations, including a stake in an entity operating three pizza restaurants.
- Digital sales are growing quickly and accounted for 18% of total revenue last year.
- The chain updated its menu to attract a broader customer base, including Whole 30 options focusing on proteins and vegetables, such as Chipotle's Whole30 Salad Bowl.
Chipotle operates as a single segment and divides its operations across eight regions. The company generated $5.6 billion in revenue for FY 2019, up 14.8% year-over-year (YOY), as net income rose 98.3% to $350.2 million. In the past two years, Chipotle has seen a dramatic increase in revenue. It's risen by $1.1 billion, or 24%, over two years from FY2017 to FY2019. The growth marks a sharp financial and operational turnaround after sales and profits plunged in 2016 and 2017 due to customer illnesses caused by E. coli bacteria at Chipotle restaurants in as many as 12 states.
Chipotle's Business Segments
Chipotle does not report individual financial figures for its eight regions. But the company has been extending its reach through several measures. Chipotle's digital sales through delivery and customer pickup have surged in recent years, rising more than 90% in FY 2019. Last year, digital sales accounted for 18% of revenue, up from 10.9% of revenue in FY2018. That figure is likely to keep rising with delivery capabilities now available at 98% of Chipotle locations.
Chipotle also is expanding its store footprint in the U.S. and abroad. In FY 2019 it added 140 locations mainly under the Chipotle name and also including three Pizzeria Locale restaurants. Seven locations closed. Companywide, average restaurant sales increased by 10% YOY to $2.2 million in FY 2019, while comparable restaurant sales increased by 11.1%. By contrast, Chipotle's comparable restaurant sales increased by just 4.0% in FY 2018, when it was still recovering from the E. coli food crisis.
Chipotle's Recent Developments
In early 2019, Chipotle made a concerted effort to increase efficiency for customers. The company introduced a drive-through option called "Chipotlane," as well as improvements in digital platforms and delivery partnerships. Late in the year, the company also announced plans to test a new restaurant design to capitalize on its more than $1 billion in digital sales. It includes walk-up windows, premium placements for pick-up portals, and other features aimed at increasing efficiency for consumers.