During Chipotle’s second quarter earnings call Wednesday after market, CEO Brian Niccol summed up the company’s results in a single word: “Outstanding.” Such a statement isn’t really disputable – the chain’s revenue jumped 18.2% year-over-year, while same-store sales increased by 11.1% driven in large part by an 8.7% increase in transactions.
The chain’s traffic growth continues to buck overall industry trends as inflation-weary consumers have pulled back on their restaurant spending in favor of cooking at home. Many quick-service chains have responded to this pullback by launching a value war, with meal deals and bundles ranging from $2 to $7. Such activity has proven to help slightly move the needle at those chains, but it hasn’t impacted Chipotle’s business at all.
“We’re gaining market share every month. As we stay focused on executing our core business, we see results not only in comps and transactions, but also with the market share gains we’re making,” Niccol said during the call. “Chipotle is not built on promotional prices; it’s built on great culinary exactly how you want it with great speed. We keep executing and continue to get market share and our value scores continue to move up. We’re going to play our offense throughout this whole process.”
Niccol added that Chipotle is experiencing transaction growth across every income cohort, which reiterates those high value scores. The company has also benefited from faster throughput, which has been a top priority for the company for the past several quarters. When restaurants are fully staffed and properly deployed, it becomes a better experience for both staff and guests, Niccol said, which further strengthens the chain's value proposition.
Chipotle brought back chicken al pastor during the second quarter, which generated a more than 20% incidence rate and helped drive transactions and spend. Niccol said smoked brisket is on deck to launch this fall and he expects a tailwind from that limited time offering as well, pointing to its popularity and, again, the company’s recent throughput efforts.
“[Smoked brisket] is one of our most requested menu items,” Niccol said, expressing confidence in the chain's overall LTO strategy. “When we go back to something, like chicken al pastor, we seem to be able to talk about it in a much more exciting way because we’ve learned some things about it. We execute it better, train better, our teams are familiar with the execution. One of the ways to make these initiatives more effective is through great operational throughput. If we have soft operations, they won’t be nearly as effective.”
Chipotle’s Q2 by the numbers
- Total revenue increased 18.2% to $3 billion
- Same-store sales increased 11.1%
- Operating margin was 19.7%, a year-over-year increase from 17.2%
- Restaurant level operating margin was 28.9%, an increase of 140 basis points
- Opened 52 new company-operated restaurants with 46 locations including a Chipotlane, and one international licensed restaurant
Contact Alicia Kelso at [email protected]
