The year 2019 has so far turned out to be an encouraging one for the Retail-Restaurants industry. Year to date, the industry has rallied 25.1% compared with the S&P 500’s 17.3% increase. Also, Chipotle Mexican Grill, Inc. (CMG - Free Report) , which belongs to the same industry, has gained 69.5% over the same time frame.
Other stocks such as Papa John's International, Inc. (PZZA - Free Report) , Denny's Corporation (DENN - Free Report) and Domino's Pizza, Inc. (DPZ - Free Report) from Retail-Restaurants have also gained 13.9%, 30.5% and 13.3%, respectively, so far this year.
Let’s delve deeper and find out the reasons that have kept this Zacks Rank #1 (Strong Buy) company ahead of its peers. You can see the complete list of today’s Zacks #1 Rank stocks here.
Chipotle is focusing on strengthening its brand and recovering sales by shifting its strategy from giveaways, discounts and rewards to new menu items, operational excellence, enhancement of guest experience by retraining workers, technology-driven convenience, and more aggressive brand marketing. Roll out of queso substantially spurred sales.
Additionally, Chipotle has been working on a new pipeline for its menu offerings. On Jan 2, the company launched its first menu innovation called Lifestyle Bowls for mobile and web orders that resonated well with consumers. It generated over 1.3 billion earned media impressions in the first few days of January.
These apart, the company’s robust marketing activities including a combination of brand-building efforts as well as transaction-driving promotions and advertising are resulting in a steady inflow of new customers.
In a bid to gain customer confidence as part of its digital innovation, Chipotle is prioritizing its e-Commerce program. The company is aggressively trying to make digital ordering more appealing to customers and very efficient for its restaurants to drive digital sales and retain customers. In this regard, it is imperative to mention that 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.
Furthermore, the first quarter of 2019 saw particularly strong traction in delivery sales. In the quarter, digital sales grew 101% year over year. The metric totaled $206 million during the first quarter and represented 15.7% of sales.
Also, since the rollout of its “Smarter Pickup Times” technology, there has been a significant increase in digital orders and higher guest satisfaction. As the company’s digital orders are made on a second make line, Chipotle allows it to deliver excellent throughput and enhance the experience of customers who are increasingly shifting to digital ordering. In 2018, the company enabled digitized make lines in more than 1,000 restaurants and expects to roll it out in all restaurants by the end of 2019.
Last month, Chipotle said that costs may increase by approximately $15 million, if Trump tariffs get enacted on Mexican imports. According to Chipotle’s CFO Jack Hartung, if the tariffs are levied, it will likely offset the costs through margin enhancement efforts and modest price increases.
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