Chipotle customers are spending more to dine on queso and steak
The fast-casual chain has also just introduced pricy new menu items, including cauliflower rice
By Tonya Garcia, MarketWatch
July 24, 2020
Chipotle Mexican Grill Inc. reported a 4.8% second-quarter revenue decline to $1.4 billion, but the average check rose by 5% as customers choose to add more steak and queso to their entrées.
In addition, customers are ordering for larger groups of people.
“I think that’s because instead of the person working and going out to lunch maybe with a group, [when] they’re all paying [for] themselves, now it’s going to the restaurant and then ordering for the family,” said John Hartung, Chipotle’s CMG, -0.49% chief financial officer, on the late Wednesday earnings call, according to a FactSet transcript.
Chipotle is down 1.6% in Thursday trading despite beating earnings and revenue expectations. Analysts, who attribute the share slide to lofty investor expectations, remain largely upbeat about the fast-casual chain due to its digital investments, its real estate prospects and its continued menu innovations.
Chipotle has launched a new line of organic drinks, Tractor Beverages, which have a philanthropic component to aid U.S. agriculture, this week.
And last week, the company began testing cauliflower rice. Chipotle also recently introduced a digital-only option, quesadillas.
“The company’s March 1 launch of Queso Blanco has seen good reception following targeted marketing that uses its growing customer data to drive product attachment,” wrote JPMorgan analysts in a note, who say other items are being considered for a digital-only menu.
“Chipotle has also learned that in the early days of the digital-only quesadilla launch, people are willing to go through the app/digital experience just to get the product.”
JPMorgan rates Chipotle stock neutral and raised its price target $20 to $1,040.
A number of upbeat analysts have raised Chipotle’s price target...