Chipotle Had Another Insane Year, Calls Itself The Fast Food Model Of The Future
Chipotle just reported a 35% earnings increase in 2014. The results show just how powerful the company has become in the fast casual dining industry.
If you put $60,000 into Chipotle when it went public in 2006, you’d be a millionaire today.
The burrito giant’s stock has shot up in recent months, and climbed even higher Tuesday to a record of $725 per share. It’s a long way from its 2006 IPO, when its shares, initially prices at $22, doubled to $44 by the close of its first trading day.
You may have missed your chance to become a Chipotle millionaire, but the company’s good run looks set to continue: in fiscal year 2014 earnings announced today, with profits up by 35% over the year prior. Same-store sales rose 16.8% over the course of the year.
Chipotle offered investors and customers more good news when it announced that while its average check increased by 8.3% last year, largely because of a menu price increase, the company had no plans for an additional price hike in 2015.
“We’re not in a hurry to raise prices,” Chipotle founder Steve Ells said on an earnings call. “We always want to be accessible and affordable. We want people to be able to come to Chipotle as often as they want, as many times a week as they want.”
Ells said Chipotle’s success was due in large part to the fact that it wasn’t trying to be “all things to all people” or resort to “marketing gimmicks”, a clear jab at McDonald’s, one of its early investors, which Chipotle has recently taken shots at in the press. Ells added that Chipotle has also resonated well with teens and millennials, more than any of its competitors.
“Chipotle has created the new fast food model,” Ells said. “Our vision is really resonating with teens, millennials, and Generation X.”
Ells cited industry research that he said shows that Chipotle is one of the most popular restaurant chains among teens and has been growing in popularity among the demographic.
“This report from 2014 ranks Chipotle as the third most popular brand among teens, up from number eight in 2013,” Ells said. “Gen X consumers were 33% more likely than average to choose Chipotle, with millennials Chipotle was even more popular. With customers in this group 75% more likely than average to choose Chipotle over other restaurants. We believe that our popularity among these younger consumers is tied to our vision and the growing interest in issues related to food and how it is raised.”
Chipotle executives on the call noted that the company opened 60 new restaurants in the fourth quarter alone, and a total of 192 throughout 2014. The company plans to open around 200 more this year.
“When we have a competitor open up right next to us we might see maybe a week of impact but then those customers come back,” Ells said. “We’ve never seen a competitor open up near us and take any sales away from us in a sustainable way. We have shown that you can own and operate all of your restaurants rather than franchise and still grow at a rapid rate, that you can spend more on ingredients, not less, and still serve high-quality food at reasonable prices and have industry-leading margins and returns.”