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Chipotle (CMG) Tests New Loyalty Program in Three Cities

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In an effort to attract more customers, Chipotle Mexican Grill, Inc. (CMG - Free Report) has launched new loyalty program, Chipotle Rewards. The company is currently testing the new loyalty program in three cities, Phoenix, Kansas City, and Columbus, OH. Chipotle is likely to launch this program nationwide by 2019.

Through the Chipotle app or on eligible customers can sign-up for Chipotle Rewards. For every $1 spent, customers can get 10 reward points. After the accumulation of 1,250 reward points they will be able to select their favorite menu item without restrictions.

Chief digital and information officer, Curt Garner stated that “Chipotle Rewards is a critical part of our efforts to digitize and modernize the restaurant experience”. The latest move underscores the company’s efforts to strengthen its brand by focusing on discounts and rewards.

The company’s new CEO Brian Niccol has successfully shown his expertise in restaurant operations, digital technologies and branding, which have significantly boosted Chipotle’s first- and second-quarter earnings. Moreover, Chipotle has gained 40.6% in the past year, outperforming the industry’s growth of 6.8%.


Digitization to Drive Growth

Chipotle is prioritizing its e-Commerce program to gain customer confidence as part of its digital innovation. Also, it is aggressively trying to make digital ordering more appealing to customers and very efficient for its restaurants in order to drive digital sales and retain customers. To this end, Chipotle 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. Till date, delivery is available from 1,700 Chipotle restaurants. The company targeted to reach 2,000 restaurants by the year end.

In the second quarter, the company made new records as digital sales mix was 10.3% of sales and grew 20% year over year. Also, digital sales grew 33% year over year. Since the rollout of its “Smarter Pickup Times” technology, there has been a significant increase in digital orders and higher guest satisfaction as well. As the company’s digital orders are made on a second make line, it allows Chipotle to deliver excellent throughput and enhance the experience of customers who are increasingly shifting to digital ordering.

Zacks Rank & Stocks to Consider

Chipotle currently has a Zacks Rank #3 (Hold). Better-ranked stocks worth considering in the same space include BJ's Restaurants, Inc. (BJRI - Free Report) , Carrols Restaurant Group, Inc. (TAST - Free Report) and Denny's Corporation (DENN - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BJ's Restaurants, Carrols Restaurant and Denny's earnings in the current year is expected to grow by 50.4%, 80% and 17.2%, respectively.

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