Chipotle Mexican Grill (CMG, Financial) released its second-quarter 2020 results on July 22 after the market closed. While earnings and revenue were down year-over-year, they exceeded Refinitiv’s consensus estimates.
Key metrics
The burrito chain posted adjusted earnings per share of 40 cents in the second quarter, down 90% as compared to the prior-year quarter. Revenue of $1.4 billion plunged 4.8% on a year-over-year basis due to coronavirus-related restaurant closures as well as slowdown in overseas sales. Analysts had predicted EPS of 35 cents on $1.34 billion in revenue.
Sales at Chipotle restaurants that remained opened for at least 13 months decreased 9.8%. Having plunged 24.4% in April to turning positive in June depicts how the metric picked up on a sequential basis. The company’s same store sales are up 6.4% so far in July owing to positive impact from the Fourth of July weekend.
Digital sales
Digital sales remained the highlight of the quarter as the company notched a 216% gain. The growth was attributable to more customers ordering online. Digital sales made up roughly 61% of total quarterly revenue.
The chain had struck new delivery partnerships with third-party delivery services like UberEats and GrubHub during the quarter, which resulted in rise digital orders as well as decrease in delivery time and cancellations. To support the mammoth rise in digital orders, the company has promised to engage 10,000 new workers in the months ahead. Chipotle’s Chairman and CEO Brian Niccol had the following to say:
"Our investment in digital over the past few years has provided our customers with convenient access to Chipotle how and where they want it. We'll continue to invest in elevating the digital experience, including opening more Chipotlanes, while innovating with new culinary offerings such as cauliflower rice, organic beverages and quesadillas. I'm confident we will finish 2020 with good momentum and be well positioned for the long run."
Store count
For the quarter ended June 30, Chipotle launched as many as 37 net new restaurants, including three relocations. The company shut down three restaurants as well during the quarter, bringing the total restaurant count to 2,669.
Guidance
Chipotle withdrew its financial forecast for 2020, citing the global uncertainty caused by the pandemic.
Disclosure: I do not hold any positions in the stocks mentioned.
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