Chipotle reels in record sales, but takes a profit hit on delivery
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Guac dirty to me... So extra. Chipotle's sales jumped 14% from last year to a quarterly record of $1.6B. Digital orders were the steak in Chipotle's earnings bowl, taking the limelight as we got guac all over our WFH laptops:
- Digital sales more than tripled, helping offset lost traffic from depressed restaurant dining.
- Online orders made up nearly half of the burrito legend's total sales. Despite the e-win and record sales, Chipotle stock fell because profit took a hit.
Dude, where's my carne?... ETA for your asada is 15 minutes, but Chipotle would rather you pick it up instead. About half of Chipotle’s digital customers chose delivery last quarter (instead of take-out or drive-thru) — that boosted costs and hurt profit:
- Profit fell 19%, partly because of delivery costs. Food delivery companies often charge restaurants double-digit commissions on orders.
- Chipotle says that the delivery fees it charges don’t fully cover the commissions it pays to partners like DoorDash and Grubhub.
Delivery success doesn't always deliver... Chipotle would've been better off if people only did drive-thru and/or pick-up. It's not in Chipotle's interest to go full-ghost kitchen (delivery only). That's why it opened 44 new restaurants last quarter, 26 of which include digital-order drive-thru lanes (aka Chipotlanes). Investment in take-out/drive-thru could be the secret salsa to fast-casual's pandemic profits.