Chipotle (CMG) Launches Loyalty Program Nationwide, Stock Up

In an effort to attract more customers, Chipotle Mexican Grill, Inc. CMG has launched its loyalty program — Chipotle Rewards — nationwide. The company had already tested this program in cities like Phoenix, Kansas City, and Columbus, OH. Following the news, shares of the company increased 2.3% on Mar 12. Also, Chipotle has gained 97.4%, outperforming the industry’s 16.5% growth in the past year.

Notably, Chipotle is leaving no stone unturned to promote the loyalty program. The company has partnered with PayPal’s Venmo to give away up to $250,000 to nearly 25,000 customers from Mar 12 to 15.

Eligible customers can sign-up for Chipotle Rewards via Chipotle app or on Chipotle.com. For every $1 spent, customers can get 10 reward points. After the accumulation of 1,250 reward points, they will be able to select their favorite menu item without restrictions.

The company’s new CEO Brian Niccol has successfully shown his expertise in restaurant operations, digital technologies and branding, which have significantly boosted Chipotle’s performance.

Digitization to Drive Growth

Chipotle is prioritizing its e-commerce program to gain customer confidence as part of its digital innovation. Also, it is aggressively trying to make digital ordering more appealing to customers and very efficient for its restaurants in order to drive digital sales and retain customers. To this end, Chipotle redesigned and simplified its online ordering site, enabled online payment for catering, online meal customizations and collaborated with several well-known third-party providers for delivery.

In the fourth quarter of 2018, digital sales grew 66% year over year, marking an acceleration from 48% in the third quarter. Digital sales totaled $158.6 million during the fourth quarter and constituted 12.9% of sales. In 2018, the company created records as digital sales were 10.9% of sales and went beyond $0.5 billion. Overall digital impressions increased 20% during the same time frame, while social impressions increased nearly 40% year over year.

Also, since the rollout of its “Smarter Pickup Times” technology, there has been a significant increase in digital orders and higher guest satisfaction. In 2018, Chipotle enabled digitized make lines in more than 1,000 restaurants and expects to roll it out in all restaurants by the end of 2019.

Zacks Rank & Key Picks

Chipotle has a Zacks Rank #3 (Hold). Better-ranked stocks in the same space include Brinker International, Inc. EAT, Starbucks Corporation SBUX and Darden Restaurants, Inc. DRI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Brinker International current-year earnings are likely to grow by 10%.

Starbucks delivered positive earnings surprise in all of the trailing four quarters, the average being of 18.3%.

Darden Restaurants reported better-than-expected earnings in three of the trailing four quarters, the average beat being 4%.

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