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Profits soar at red-hot Chipotle chain

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By Roberto A. Ferdman
The Washington Post
  • A bicyclist pedals pass a Chipotle Mexican Grill in Beverly Hills, Calif. The Mexican fast food chain’s second-quarter sales jumped by 29 percen...

    Associated Press

    A bicyclist pedals pass a Chipotle Mexican Grill in Beverly Hills, Calif. The Mexican fast food chain’s second-quarter sales jumped by 29 percent compared to the same period in 2013.

There are few things as smooth as Chipotle's ability to sell more and more burritos seemingly each day, week and month, but certainly each quarter and every year.
The Mexican fast food chain, which now slings billions of dollars in burritos (and burrito bowls) each year, saw its second quarter sales jump by 29 percent compared to the same period last year.
Chipotle's performance didn't merely beat analyst estimates — it crushed them. The chain was forced to raise its prices earlier this year, after rising food costs swallowed a hefty chunk of the company's profits. The expectation was that it would slow down store traffic, but instead same-store sales — sales at Chipotle restaurants open for at least 13 months — jumped by 18 percent.
Chipotle's annual sales are now expected to nearly eclipse $4 billion in 2014, according to Bloomberg estimates. That would mean 1,143 percent growth since 2003, and 377 percent growth since 2006, when the company went public. By 2018, Chipotle's sales are slated to jump another 43 percent to more than $6.5 billion.
Sales growth has also significantly outpaced sheer restaurant growth (by a factor of almost two to one), meaning that there aren't merely more Chipotles today, but each Chipotle is also selling more burritos on average than it used to.
Chipotle's unstoppable growth is actually fairly inconsistent with that of the rest of the American fast-food industry. McDonald's has struggled to lure Americans as of late — its U.S. sales are expected to decline for a third consecutive quarter. Taco Bell, too — sales jumped after the launch of the Doritos Locos Tacos, but they have since fallen. In fact, the fast-food sector just isn't doing all that well in the U.S. right now.
Why has Chipotle managed to grow so quickly? Mainly, the chain has capitalized on a bet that Americans were willing to pay a little more money for a lot more assurance about the origins of their fast food. The company's message has carried with it a firm commitment to ingredients, animal treatment and the environment. While some have questioned the extent to which the chain follows through with that mission, it's hard to deny that it has resonated with American fast-food goers. Chipotle is also phenomenally fast at slinging burritos — it's most efficient branches can serve 350 customers per peak lunchtime hour. And it has fared well in an increasingly carb-conscious America by offering its popular tortilla-less burrito bowls.
Story tags » Restaurants & catering



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