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Chipotle's CEO On Digital Business, Potential Price Hikes, Growth

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Chipotle's CEO On Digital Business, Potential Price Hikes, Growth

On CNBC’s “Fast Money Halftime Report,” Chipotle Mexican Grill (NYSE: CMG) CEO Brian Niccol said the fast casual chain's biggest digital driver is Chipotlanes, adding that it's a key component to how the company continues to keep people engaged and drive their digital business.

Chipotle is testing price hikes to make delivery more profitable.

The CEO said he doesn’t believe the potential price hikes will turn customers off from the company.

"We’re going to be smart about how we price it. We want to maintain our great value proposition and the good news is that of all these places that we’re testing I think we’re still one of the best options for delivery."

Rising commodity costs have been eating into the income of restaurants because of the pandemic, and Chipotle is no exception.

Chipotle has experienced higher commodity costs in beef and cheese, but i's a temporary situation, and he company does not view it as an issue, Niccol said.

The pandemic certainty caught a lot of companies off guard, but Niccol said Chipotle plans for the unexpected.

Some companies in the same space as Chipotle are more expensive, and some are less expensive. When asked why an investor would buy Chipotle over its competitors, Niccol named growth potential as the reason. 

“We have tremendous growth in front of us and I think we are truly differentiated, and the food that we provide is on trend with how people want to eat,” the CEO said. 

Chipotle’s average unit volumes should return to 2.5 million, and margins will be at 25%-plus, Niccol said. The returns on Chipotle new restaurants are the best in the industry, he said. 

To further his case for Chipotle’s growth potential, Niccol said Chipotle only has 2,700 restaurants, and the number could reach 5,000-6,000 in the U.S. 

When asked how important younger customers are to the business, Niccol said younger, newer customers are “really critical to Chipotle.”

The values that are important to Chipotle match with the values of the younger generation, he said. 

Photo courtesy of Chipotle. 

 

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