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Chipotle (CMG) Unveils Chipotle Digital Kitchen in New York

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In an effort to drive digital sales, Chipotle Mexican Grill, Inc. (CMG - Free Report) is opening its first digital-only restaurant — Chipotle Digital Kitchen — in Highland Falls, New York. The restaurants will operate starting this Saturday.

The new prototype comprises pick-up and delivery options only and does not support dining areas and front line service. To avail the services, guests need to order in advance through Chipotle.com, Chipotle app or third-party delivery partners. Also, a separate lobby is provided for the pick-up of large catering orders.

Moreover, the concept allows Chipotle to explore urban areas (that wouldn't support a full-size restaurant), thereby boosting flexibility in terms of future locations.

In this regard, Curt Garner, Chief Technology Officer of Chipotle, stated, "The Digital Kitchen incorporates innovative features that will complement our rapidly growing digital business, while delivering a convenient and frictionless experience for our guests."

Increase Focus on Digital Capabilities

Chipotle is focusing on expanding digital program to drive growth during the coronavirus pandemic. In order to drive digital sales and retain customers amid the coronavirus crisis, the company is leaving no stone unturned to make digital ordering more appealing to customers and more efficient for its restaurants. In this regard, Chipotle has redesigned and simplified its online ordering site, enabled online payment for catering, online meal customizations and collaborated with several well-known third-party providers for delivery. During the third quarter, the company initiated the launch of its group ordering feature on Chipotle app, thereby boosting easy and frictionless user experience. During third-quarter 2020, digital sales soared 202% year over year to $776 million. Also, it represented 49% of sales during the quarter.

Moreover, partnerships with Uber Eats and Grubhub are attracting new customers. Collaboration with all major third-party delivery aggregators has boosted orders. Meanwhile, the company expects the momentum to continue during the fourth quarter of 2020, thereby expecting digital sales to cross $2.5 billion in 2020.

So far this year, shares of Chipotle have gained 55.8% compared with the industry’s 8.4% growth.

Zacks Rank & Key Picks

Chipotle currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the same space include Brinker International, Inc. (EAT - Free Report) , Del Taco Restaurants, Inc. (TACO - Free Report) and Fiesta Restaurant Group, Inc. (FRGI - Free Report) . Brinker sports a Zacks Rank #1, while Del Taco and Fiesta Restaurant carry a Zacks Rank #2 (Buy).

Brinker has a trailing four-quarter earnings surprise of 116.6%, on average.

Del Taco and Fiesta Restaurant’s earnings in 2021 are expected to surge 41.4% and 418.8%, respectively.

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