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Chipotle is becoming 'an impressive digital player': analyst

Kenneth Underwood
Senior Producer

Chipotle (CMG) shares closed at an all-time high Wednesday on the heels of second quarter earnings that topped analyst expectations.

The rally caps a long road back for the fast casual chain, which has been plagued in recent years by an E. Coli outbreak that sickened several customers.

Chipotle’s success comes amid a boom in digital sales, which saw growth of nearly 100% for the quarter. “The digital legs here are certainly taking hold,” Andrew Charles, Cowen director, told Yahoo Finance’s On the Move. “They're certainly surmounting to be an impressive digital player as well as delivery player for that matter, too.”

A Chipotle worker makes the new Quesadilla dish at the Chipotle Next Kitchen in Manhattan, New York, U.S., June 28, 2018. REUTERS/Shannon Stapleton

Digital accounted for just over 18% of Chipotle’s overall sales in the quarter, and it has shown no signs of slowing down. “They think they can get it 30% to 40% of their sales in terms of where digital could be,” said Charles. “There's certainly a higher ticket associated with that as well, which will help as they get the mix benefit of getting people to go more to digital through suggestive selling efforts. And so that could certainly keep going higher.”

The next frontier

Chipotle’s success comes amid what many see as a shift in the restaurant industry. “Digital in my view is now the next frontier,” said Charles, adding that restaurants are no longer just focused on physical locations. “What was 20 years ago a competition for real estate, certainly, real estate is still very important, but digital in our view and the capabilities that restaurants have that are consumer facing as well as the data analytics that they can provide as well, I think that's the new competitive frontier.”

Kenneth Underwood is a senior producer for Yahoo Finance. Follow him on Twitter @TheKennyU.

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