Chipotle May Have Just Fixed Its Biggest Problem

After more than a year of steady declines in transactions, this important metric turned positive in a big way in the fourth quarter.

Feb 7, 2019 at 8:15AM
In recent years, Chipotle Mexican Grill (NYSE:CMG) has done a lot to move beyond the health and public-relations nightmare that followed multiple food-borne-illness events. Furthermore, the burrito and bowl seller had established enough credibility and goodwill with its most loyal customers that it has been able to increase prices substantially, helping drive its comps — sales at restaurants open at least 12 months — and profit margins higher over the past year.However, higher prices have had to do a lot of heavy lifting for Chipotle, since its transactions comps — a solid proxy for customer traffic — were negative in the first three quarters of 2018. In other words, Chipotle has had a persistent problem attracting more customers.

However, it appears that trend has finally been broken. Chipotle’s fourth-quarter earnings report, released on Feb. 6, included a fantastic 6.1% comps growth, with 2.2% of that number being — finally — increased transactions. Let’s take a closer look at Chipotle’s full earnings report.

Higher prices, lower costs helping improve profitability

 

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