Chipotle will have more than 6,000 restaurants in the future: CEO Brian Niccol
Life after the coronavirus pandemic for the red-hot Chipotle (CMG) may include a heck of a lot more locations across the United States than Wall Street currently believes.
Credit that to Chipotle CEO Brian Niccol — who oversees a 2,700-store burrito dynasty at present — thinking outside the box on what a post-COVID restaurant should look like. To Niccol, that restaurant of the future should boast a drive-thru (dubbed a ‘Chipotlane’) and be positioned somewhere in a well trafficked area of suburbia. Or, it could be a small location in a city that solely focuses on quickly servicing mobile orders — no congregating inside to eat necessary, just grab your burrito and hit the road.
“I think our future is not 3,000 restaurants, it's not 5,000 restaurants — I think it's 6,000-plus restaurants. And a large majority of those will have Chipotlanes. And that's really exciting for our business,” Niccol told Yahoo Finance.
Note the long held number on Wall Street for Chipotle’s store size potential has been 5,000.
Niccol adds, “I just think what we're finding is, as we look at trade areas with these different call it, restaurant formats, it provides us more access to real estate. And I just think we're going to go beyond 5,000. What I say to everybody when they ask me the question, like, well is it 5,000? Is it 6,000? I know we've got tremendous growth in front of us, and I'm very optimistic about people wanting our food and then wanting these different type of access points to our great food.”
It’s hard to argue with Niccol’s growth-oriented vision for Chipotle.
Chipotle’s stock has exploded nearly 400% since the former Yum! Brands marketing wizard took over the chain back in February 2018. Since then, Niccol has jump-started Chipotle’s once dormant product innovation and virtually non-existent digital platform. Importantly, Niccol reinstalled the cooking discipline that made Chipotle’s food taste great —and in turn made it a Wall Street darling.
Niccol has been rewarded for his efforts by Chipotle outperforming most of its fast-food rivals during the pandemic. But it hasn’t been totally immune from the pandemic’s tentacles.
Along with its restaurant peers, Chipotle closed its dining rooms in mid-March and shifted strictly to takeout and delivery as social-distancing measures across the country kept people indoors. Indoor dining slowly returned in the second quarter as state restrictions eased, but did still weigh on sales. Digital sales during the second quarter grew 216.3% and represented approximately 60.7% of revenue. Same-store sales fell 9.8% — with sales growth returning later in the quarter.
Recalls Niccol of those early pandemic days in March, “So I wasn't sure exactly how we were going to weather the storm. But I knew we had a fighting chance because we had that digital system in place.”
And hey, the burritos are great again — that helps, too.
Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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