Chipotle Mexican Grill’s Partnerships Will Lead to GrowthCMG) has been on a strong run in the last three months, gaining almost 20%. This impressive performance can be attributed to Chipotle’s strong growth in recent quarters. For instance, last quarter, Chipotle posted a 14% increase in revenue, while its net income also increased to $140 million from $110 million in the prior-year quarter.
The fast food major reported significant growth in both its top and bottom lines for the quarter, primarily driven by an accelerated setting up of new restaurants for the quarter and an approximately 4.3% growth in the sales of comparable restaurants.
Taking the right steps
Chipotle recently declared the installment of its admired “Cultivating Thought” author series along with an innovative online sweepstakes referred to as the Super Short Book Report. These new sweepstakes are packaged with Amazon Kindle and invites contestants to present a 103-character book report, referring to any one of the innovative “Cultivating Thought” stories with an opportunity to win prizes that include a single among 500 Amazon Kindle Paperwhite e-readers.
This unique promotion strategy of Chipotle is believed to increasingly attract several new customers and thus multiply company sales for the quarter and in the near future as well. Also, Chipotle opened 48 new restaurants during the quarter and in line with its continued commitment to extend the customer reach. Going forward, the company expects to open new restaurants at or above the upper end of the earlier declared range of 190 to 205.
The fast foods provider is expected to be significantly focused on expanding its customer base by adopting new growth strategies such as the “Cultivating Thought” author series concept which is forecasted to deliver impressive results for the company and in line with the key analyst’s superior growth expectations for Chipotle in the near-term and over a longer term.
Partnerships to drive growth
Chipotle has recently entered into a delivery partnership agreement with Tapingo to extend its current delivery program. This strategic deal would target college students and expand the company’s strategic food offerings to college campuses. Apart from Tapingo, Chipotle also has countrywide delivery partnerships with OrderUp, which allows delivery services to a number of smaller Chipotle markets, and with Postmates, which is a key delivery service that functions in a number of major Chipotle markets.
In general, the restaurant industry has delivered five successive years of outstanding sales growth and is expected to deliver another impressive growth story during 2015. Despite several obstacles, the industry is believed to traverse through the difficult times with significant sales efforts and robust fundamentals.
Chipotle is also extending its e-commerce schedule by strategically adding the delivery option. Apart from the re-introduction of chipotle.com for its key mobile users, the global fast food chain has started delivery mobile and online orders in 67 metropolises leveraging the innovative Postmates delivery app.
Chipotle has also introduced a new app for Apple Watch to enable diners to order prior they enter the restaurants. Further, the fast foods chain is also experimenting innovative mobile payment techniques that include using the Google Wallet, the iOS app and payments through Apple Pay at restaurants.
The well-planned new partnerships of Chipotle with other key service providers is believed to expand the company’s already solid customer base which is further supported by the ease of food ordering through newly developed mobile apps and by using the company’s website.
Chipotle’s stock has gained impressively in the past three months, and it is quite probable that the company will be able to sustain the growth in the future. This is because it is taking the right steps to grow in the long run. Thus, I think investors should remain invested in Chipotle for the long run.
Published on Sep 26, 2015By Ayush Singh