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Back to Basics Pays Off For Chipotle

In-restaurant sales increased 22.9%, while digital sales represented 39.3% of food and beverage revenue for Q1 '23, year-over-year.
Chipotle bowl of delicious food

Q1 was another strong quarter for Chipotle Mexican Grill Inc.

Compared to year over year: 

  • Total revenue increased 17.2% to $2.4 billion
  • Comparable restaurant sales increased 10.9%
  • In-restaurant sales increased 22.9%, while digital sales represented 39.3% of food and beverage revenue
  • Operating margin was 15.5%, an increase from 9.4%

The fast-casual brand reported financial results for its Q1 '23 ended March 31 on Aril 25. 

During the quarter, Chipotle opened 41 new restaurants, including with 34 locations with a digital pickup lane, or Chipotlane." We remain on track to open between 255 and 285 new restaurants this year with at least 80%, including a Chipotlane," CFO Jack  Hartung said during an April 25 earnings calls with analysts.

Other good news on the balance sheet: good, beverage and packaging costs in the first quarter were 29.2% of total revenue, a decrease of 180 basis points compared to the Q1 '22. Food costs benefited from menu price increases taken in the prior year and lower avocado prices, which were partially offset by inflation across several food costs.

Back to Basics

To the brand's success, CEO Brian Niccol credits Project Square One, the brand's focus on foundational elements of the Chipotle experience.  

"Our focus on getting back to the basics and reestablishing Chipotle standard of excellence is beginning to drive strong results," Niccol said in the earnings call with analysts.

"To have our digital make line open from open to close, to have ingredients on that line from open to close, to being staffed and trained on the front line, so to get people down the line really fast with exactly what they want. I can't emphasize enough how important that is because everything then builds from there... Our digital personalization program builds on that," he explained to analysts.  "Our menu innovation builds on that. Talking about a brand with purpose builds on that."

Looking ahead, the 33 million strong Chipotle Rewards program members can expect more personalized rewards. "I think the teams have done a great job of turning the data into action through ... CRM programs. And we're just starting to dip our toe into the personalization opportunity. And I think you're going to see CRM evolve into personalization at meaningful scale... There is tremendous opportunity going forward, assuming we can get this personalization program right," Niccol explained. 

Additional Noteables

  • Opened its first Chipotlane in Ontario
  • Delivery is in "the high teens"
  • Is rolling out digital tipping
  • 33 million rewards members
  • Successful test of a grill that's 10% faster and is more consistent
  • Rolled out location-based technology to the app. This has resulted in more rewards members scanning for points in restaurants, which drives further engagement in the rewards program, Niccols explained. It also has reduced the number of customers ordering at one restaurant and going to pick up their order at another.  
  • Cultivate Next Fund announced 2 new investments, including Local Line, a local food sourcing platform, and Zero Acre Farms is a food company that is focused on healthy, sustainable cooking oils made by fermentation that are more environmentally friendly. 


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