Chipotle Posts Strong Gains Driven by Digital

46% of 2021 sales came via online channels

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Feb 09, 2022
  • 4th-quarter earnings surpassed estimates
  • Price hikes offset higher labor, ingredients costs
  • CEO Brian Niccol eyes expanding access via ‘digital ecosystem’
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Chipotle Mexican Grill Inc. (

CMG, Financial) beat analysts’ predictions for fourth-quarter 2021 earnings on Tuesday, leading to an 8% bump in the share price even as the Omicron variant slowed sales during late December and January.

The dramatic growth of digital order-ahead was largely responsible for the strong results. Online channels accounted for nearly 42% of fourth-quarter sales and 46% of sales for the entire year.

At the same time, inflation, higher ingredient and labor costs were offset by menu price increases. As CEO Brian Niccol said during an interview on CNBC’s Closing Bell, “We’re pretty fortunate with the pricing power that we have.”

Niccol told analysts on an earnings call that, thanks to its Halloween digital ordering promotion, the chain saw record-high digital transactions on Oct. 31. “Digital has proven to be sticky, as it’s a frictionless and convenient experience that has been aided by continuous investments. As a result of this pandemic, many new consumers were introduced to Chipotle via our digital channels and are now using (them) for alternative and at times incremental occasions.”

Niccol also pointed out that roughly two-thirds of customers are in-store only, with the remaining third making at least some of their purchases through digital, meaning these customers are more frequent than their in-store only counterparts.

For the fourth quarter, total revenue increased 22% to $2.0 billion year over year. Comparable restaurant sales increased 15.2%, while digital sales grew 3.8% and accounted for 41.6% of sales. The operating margin was 8.1%, an increase from 7.3%. Diluted earnings per share was $4.69 compared to $6.69. The chain also opened 78 new restaurants.

During the quarter, Chipotle’s board of directors approved the investment of up to an additional $200 million, exclusive of commissions, to repurchase shares of common stock. Including this latest repurchase authorization, $240.9 million was available for share repurchases as of Dec. 31, 2021. Management also repurchased $168.9 million of stock at an average price per share of $1,750.

For the fiscal year ended Dec. 31, 2021, total revenue increased 26.1% to $7.5 billion, while comparable restaurant sales increased 19.3%. Digital sales grew 24.7% and accounted for 45.6% of sales, while the operating margin was 10.7%, an increase from 4.8%. Diluted earnings per share was $22.90, an 82.9% increase from $12.52. The year also saw the opening of 215 new restaurants.

"2021 was an outstanding year for Chipotle, highlighting the strength and resiliency of our brand. Together, we accomplished many incredible things as our passionate employees remained dedicated to delivering excellent guest experiences, aligned with our purpose and values," said Niccol in a statement. "Moving forward, we believe expanding access and convenience through our digital ecosystem, accelerating unit growth, and continuing to develop and support our restaurant employees, will put us in a much stronger competitive position."

Indeed, executives said they expect first quarter comparable restaurant sales growth in the mid- to high-single digits range and between 235 and 250 new restaurant openings during 2022. Five to 10 of those will be relocations to add the drive-thru/walk-up Chipotlane concept. Over time, management added, they believe there can eventually be at least 7,000 Chipotle restaurants in North America, up from the prior goal of 6,000 restaurants.


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