Chipotle reacts to trending hacks and increasing expenses
Chipotle has consistently been a top choice for those after a good deal, especially among college students and price-sensitive customers. The brand established its name by providing ample portions, allowing patrons to ask for additional servings of most ingredients at no extra cost. This lavishness, however, became a target for manipulation as social media influencers started to promote “hacks” intended to squeeze out maximum value. A notably popular method involved ordering a burrito bowl with double portions of everything bar meat and guacamole, which incur extra fees, and then asking for tortillas on the side to construct multiple burritos from a singular meal.
By 2020, Chipotle had recognized these trending hacks and responded by implementing charges for side tortillas. Despite these modifications, alongside escalating prices due to inflation and added costs for double servings, the brand’s dedicated customer base remained unwavering. This commitment resulted in a 23% increase in Chipotle’s stock year-to-date, even amidst growing pressures from escalating food and operational expenses.
More recently, however, Chipotle has encountered criticism from customers alleging the company has reduced portion sizes. Initially dismissing these claims, further scrutiny unveiled that 10% of its outlets had disproportionate portion metrics based on customer feedback. In response, Chipotle retrained personnel at these establishments to ensure uniform portioning throughout its operations.
As the company addresses these issues, it stands firm on balancing cost constraints with customer satisfaction, a nuanced task that will be under close observation by investors and analysts alike.
Q3 2024 financial results and upcoming growth strategies
In its Q3 2024 financial summary, Chipotle reported a 13% rise in revenue, hitting nearly $2.8 billion, though this slightly fell short of analysts’ anticipations of $2.85 billion. Comparable sales surged by 6%, marginally below the expected 6.38% growth. Despite these small setbacks, the company exceeded earnings per share (EPS) predictions, posting a 17.4% increase to $0.27, surpassing the forecast of $0.25. Nonetheless, Chipotle’s stock experienced a decline of over 7% during Wednesday’s market activity.
Looking forward, Chipotle anticipates comparable restaurant sales growth in the mid to high-single-digit range for the remainder of the year. The firm intends to launch between 285 to 315 new establishments in 2024, with 315 to 345 new sites projected for 2025, over 80% of which will feature a Chipotlane designed for online pick-up orders.
