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Chipotle Boosts Delivery Services With Grubhub Partnership

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In a bid to expand its delivery footprint in the United States, Chipotle Mexican Grill, Inc. (CMG - Free Report) recently announced partnership with Grubhub (GRUB - Free Report) . This partnership along with Chipotle’s tamper evident packaging feature is likely to enhance customer experience as well as operations. Following the announcement, shares of Chipotle increased 1.2% during trading hours on Jun 29.

Notably this partnership allows customers to order food from Chipotle locations through Grubhub app or Grubhub.com. Moreover, the customers will be entitled for contact-free delivery.

Chris Brandt, chief marketing officer at Chipotle, stated, "We're happy to utilize Grubhub's expansive network to reach more Chipotle fans across the country." 

Increased Focus on Delivery Services Bodes Well

With delivery services available at more than 98% of its restaurants, Chipotle is aggressively trying to make digital ordering more appealing to customers and more efficient for its restaurants to drive digital sales as well as retain customers.

In this regard, the company redesigned and simplified its online ordering site, enabled online payment for catering, customized online meal as well as collaborated with several well-known third-party providers for delivery. It has also collaborated with Uber Eats to boost its delivery services. Also, the rollout of its “Smarter Pickup Times” technology has been a success, driving significant increase in digital orders and guest satisfaction. During first-quarter 2020, digital sales surged 80.8% year over year. Digital sales totaled $371.8 million and contributed 26.3% to sales.

Meanwhile, the company is updating to new in-restaurant features to increase convenience for customers and delivery partners. In 2020, the company plans to add Chipotlane — a drive-thru pick-up lane — that will enable guests to pick-up digital orders without leaving their cars. We believe that a robust delivery system will drive the company’s top line in the quarters to come. 

So far this year, shares of the company have gained 25% against the industry’s 11.6%, decline.

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 are Jack in the Box Inc. (JACK - Free Report) and Wingstop Inc. (WING - Free Report) . Jack in the Box and Wingstop sport a Zacks Rank #1.

Jack in the Box’s 2021 earnings are expected to rise 22.8%.

Wingstop has a three-five year earnings per share growth rate of 11%.

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