Chipotle’s digital sales and marketing initiatives could finally put illness outbreaks in the past

Chipotle’s digital sales and marketing initiatives could finally put illness outbreaks in the past

February 7, 2019 Off By administrator

Chipotle Mexican Grill Inc. shares jumped 13.5% in Thursday trading after the Mexican fast-casual chain reported fourth-quarter earnings and same-store sales that indicated digital sales and marketing efforts are getting the company past the damage done by illness outbreaks in 2015.

Chipotle














CMG, +11.35%












  reported adjusted earnings of $1.72 per share, blowing past the $1.40 FactSet consensus. Same-restaurant sales grew 6.1%, also far exceeding the 4.1% FactSet expectation.

“The turnaround is ‘For Real’,” wrote KeyBanc Capital Markets analyst Eric Gonzalez, referring to Chipotle’s “For Real” advertising campaign, launched in September 2018.

Chipotle’s Chief Executive Brian Niccol credited that campaign as one of the factors behind the better-than-expected quarterly results.

KeyBanc credits Chipotle’s founders with creating a strong fan base for its sustainably sourced food. But, he said, the E.coli outbreak showed the company’s weak spots when using these products, sometimes from small operators that may not have the robust contamination prevention.

Read: McDonald’s sales hurt by slower drive-through times and all-day breakfast falloff

“Nearly three years after news of an E.coli outbreak first hit, the company’s recovery effort continues to waver,” Gonzalez wrote. “That said, we believe CEO Brian Niccol is bringing about positive change – instilling a corporate culture centered on accountability and recognition and addressing ‘skills gaps’ in the areas of marketing, innovation, product testing, consumer insights and technology.”

KeyBanc rates Chipotle shares overweight with a $625 price target, up from $525.

In addition to marketing, Niccol called out the introduction of Lifestyle Bowls in January, digital growth of 65.6% to $158.6 million in the quarter, the growing delivery business and mobile order pickup business, which is being facilitated by “Chipoltlanes,” and food quality efforts.

To be sure, the company hasn’t fully left outbreaks in the past. The Focus Prep program Niccol discussed means fewer people are preparing food, which improves consistency and food safety.

“In an effort to enhance our best-in-class…

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