Chipotle Summer Channel Checks Show Growth

Channel checks indicate a sequential improvement in traffic at Chipotle Mexican Grill, Inc. CMG in June, BTIG’s Peter Saleh said in a report. He maintained a Neutral rating on the company, adding that July appears to be consistent with June.

Although Chipotle’s new initiatives, such as the launch of chorizo and the limited-time loyalty program Chiptopia, could boost SSS in the back half of the year, sales recovery is expected to be gradual, analyst Peter Saleh mentioned.

Traffic In June And July

Channel checks at one of New York’s Chipotle locations suggested that traffic improved by ~9 percent sequentially in June, representing the strongest month of the year, Saleh stated. He added that the performance during the second half of June was significantly better than that in the first half. May channel checks had already suggested a 3-5 percent improvement in traffic versus April.

Traffic trends so far in July had been consistent with June, with no visible improvement due to the launch of chorizo and Chiptopia, the analyst noted. He further said that chorizo could likely drive a 4-5 percent increase in traffic once it is available nationally.

“We believe Chipotle experienced its seasonal spring sales lift (6%-7%) in June this year, two months later than usual. We are prudently modeling 2Q16 comps to be down (20.0%), implying a traffic decline of ~(15%) in the quarter, but are optimistic for some modest outperformance,” Saleh wrote.

Did you like this article? Could it have been improved? Please email feedback@benzinga.com to let us know!