Chipotle adding dessert to the menu

by Monica Watrous
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Chipotle 
Net income at Chipotle in the first quarter ended March 31 was $46,120,000.
 

DENVER — Chipotle Mexican Grill is set to debut its first-ever dessert – buñuelos. The traditional Mexican treat, which features fried tortilla strips with honey, cinnamon and sugar, is one of two dessert options the company has developed to test in its restaurants. Chipotle, which has added only a couple of items to its menu in 20 years, seeks to recover lost sales following the food safety crisis that battered the burrito chain in 2015.

Steve Ells
Steve Ells, founder, chairman and CEO of Chipotle

“The buñuelos will be served with an apple caramel butter dipping sauce,” said Steve Ells, founder, chairman and CEO, during an April 25 earnings call with financial analysts. “The buñuelos are simple to make using our existing equipment and require us to add just a few additional ingredients. They’re delicious and complement our menu nicely.”

The launch is one of several initiatives under way at Chipotle, where net income in the first quarter ended March 31 was $46,120,000, equal to $1.60 per share on the common stock. This compared with a loss of $26,432,000 in the year-ago period. Revenue, meanwhile, increased 28 percent to $1,068,829,000 from $834,459,000.

Comparable restaurant sales, a key industry metric, increased nearly 18 percent from the prior-year period.

 

“Our better performance for the quarter was due to a combination of factors, including the continuing simplification of our operations, our relentless focus on the guest experience, thorough and ongoing crew and manager training, improved execution of digital ordering, increased marketing and improvements in customer sentiment and a continued focus on serving safe, wholesome and delicious food,” Ells said.

During the quarter, the company introduced tortillas without additives, an effort several years in the making, he said.

“Chipotle is now the only national restaurant brand to use no added colors, flavors or preservatives in any of the ingredients used to prepare our food,” Ells said. “All of our food is prepared using 51 real ingredients that are recognizable high-quality ingredients that you can find at grocery stores or farmers markets.”

To support increased digital order volume in the restaurants, the company added a second production line and staff dedicated to preparing online or mobile orders.

 Chipotle
Chipotle added a second production line and staff dedicated to preparing online and mobile orders.
 

“These second make lines are led by crews specifically trained to prepare digital orders,” Ells said. “Orders on the second make line do not impact throughput or our ability to provide an excellent experience on the main service line. We’re excited about the incredible potential of digital ordering and confident in our team's ability to fulfill these digital orders.”

Earlier in April, Chipotle increased menu prices by an average of 5 percent in about 440 restaurants, said Jack Hartung, CFO.

“If you recall, mid-2014 was the last time we increased prices nationally,” Hartung said. “Since that time, we have absorbed substantial labor and food inflation, and our overall costs of doing business have increased dramatically. While we’ve been very reluctant to pass along any of these increased costs over the last year as we worked hard to fuel our recovery, now with our business beginning to improve, we have selected a handful of markets to gauge a modest price increase. We selected markets that were considered low risk by thoughtfully considering each market’s sales trends, recent and expected minimum wage increases and competitor pricing.”

 Chipotle
Earlier in April, Chipotle increased menu prices by an average 5 percent in about 440 restaurants.
 

He added, “It’s too early to comment on customer reactions, potential resistance or any impact to the comp for the year, but we’ll evaluate the trial over the remainder of 2017.”

Chipotle has spent the past year working to bounce back from an E. coli outbreak in late 2015 that sickened 55 customers in 11 states, followed by the discovery of norovirus at a Boston-based restaurant that reportedly affected dozens more. Since then, the chain has taken aggressive steps to rebuild its image and bolster its food safety practices.

“We still have much work to do, but we have the right team, the right strategy and a commitment to seeing it through,” Ells said.

Shares of Chipotle climbed as high as $485.58 in after-hours trading on April 26, up nearly 3 percent from the previous day’s close of $471.76. 

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