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The message from Chipotle Mexican Grill Inc. (CMG) on Wednesday, June 27, was faster and faster.
The company has drawn up plans during a day of investing to get up to 65 restaurant closures and restructuring costs of $ 115 to $ 135 million. He has also developed easier-to-understand numerical control plans and faster moving lines in restaurants, including clearly identified pickup shelves.
Chief Financial Officer John R. Hartung said that about half of the restructuring costs would be recorded in the second quarter, with the bulk of the rest absorbed in 2018. Hartung said the shops to be closed are located throughout the country. and that there was no common thread their age or their design.
CEO Brian Niccol described the pilot program of pickup shelves, experienced in a downtown Denver store. "This simple change resulted in a double-digit increase in our digital sales in the first few weeks, and it continued," he said. "Not only did it provide a much faster and more convenient mobile order pickup experience, but it also served as in-store marketing, raising awareness among our customers."
Digital sales accounted for 9% of the company's total sales in the first quarter and amount to nearly half a billion dollars, Niccol said. He expects digital to reach multi-billion dollar levels.
Another higher speed attempt was to add the DoorDash delivery service in April, said Niccol
This is the first major Chipolte project for Niccol, which took over the chain in March from founder and CEO Steve Ells, who is still the company's executive director. Niccol, who previously ran Taco Bell (owned by Yum Brands Inc. (YUM)), has been hailed as a turnaround artist and digital leader for Chipotle, who has been criticized for a number of issues ranging from security food to the new flops menu item.
The Chipotle stock has rebounded nearly 60% since the beginning of the year, far outpacing the expanded stock market and the occasional fast space. Shares have risen more than 40% in the last three months.
R. Morningstar's badyst, RJ Hottovy, told TheStreet on Wednesday that he was looking for an innovation in new products, including a roadmap for the future. potential expansion of the day portion to breakfast; more speed of service in the order; potentially open more drive-thrust and details of store closures.
In a note, Bob Derrington of Telsey wrote, "We believe that adding attractive new products backed by digital, online and ever-evolving loyalty programs is essential to these plans, with the addition of its second digitally enhanced production lines. same-store sales and margin growth. "
The company proposed five areas of change on Wednesday:
- Become a more culturally relevant and attractive brand to cultivate love and loyalty
- Digitize and modernize the restaurant experience to be more convenient and enjoyable for guests
- Manage good restaurants with great hospitality and good flow
- Be disciplined and focused to enhance the powerful business model of the company
- Build a great culture of support as Chipotle innovates and runs through the digital, access, menu and restaurant experience "
Chipotle added that it wanted to expand its business by focusing on its food products and offering stronger returns to investors. At the same time, it will focus on new solid economic and digital tools that will make it easier for customers. The company has fallen behind in digital control, while other companies, such as pizza chains, have excelled.
After the food security fears that hit the chain in recent years, Chipotle announced a 20.4% decrease in same-store sales in 2016. By the end of 2017, same-store sales had increased by 6 , 4%. Analysts surveyed by FactSet predict that this figure will increase by 3.2% in 2018. The turnover, which grew by 14.7% in 2017, should be increased to 4.8 billion in 2018.
Chipotle missed introductions of new products. After adding the queso to his menu at mediocre reviews, Chipotle said on Wednesday that it will now build a "pipeline of delicious menu items that boost new customer visits, are operationally easy to perform, and enhance capacity." to generate flow ".
Chipotle also announced on Wednesday that it was planning to consolidate its workforce in two offices – Newport Beach, California and Columbus, Ohio – and hire new employees in marketing, menu innovation, and marketing. Digital badysis, data badysis, human resources and customer relationship management. Chipotle employs 70,000 people and has 2,400 restaurants.
The company announced plans last month to move the Denver headquarters to Newport Beach, an action that is instructive on the company's direction.
"The relocation of headquarters to California is essential because we believe that it focuses on human capital investments as a priority and suggests a faster pace of change," writes Nicole Miller Regan, badyst at PiperJaffray, in a note published on June 21st.
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