Fast-casual chain Chipotle Mexican Grill boasted 11.6% revenue growth — $1.61 billion in the quarter ending Dec. 31 — on its earnings call Tuesday, a performance that has reaffirmed the company's strategic pivot to online and drive-through sales, according to company CFO Jack Hartung.
It posted full-year revenue of $6 billion, a 7% jump from 2019. Online sales, which comprise nearly half its total business, spiked 174%.
"One of the things we said to ourselves in 2020 was we wanted to make sure that we pivoted to the digital channel," CEO Brian Niccol told CNBC. "I think we've done a nice job of capturing that delivery business."
Due largely to its established digital presence, Chipotle has continued on its ambitious growth trajectory while many of its competitors in the fast casual space face mass layoffs, depressed sales and bankruptcy.
At the beginning of the pandemic, Hartung said, he "didn't know much, and financially, we were doing things we never did, like cash-burn analysis," he told Barron's on Tuesday. "That's something a tech startup does."
Yet, as early as April, when the parameters of the pandemic were yet to be seen, Hartung expressed confidence in the chain's cash flow thanks to its fiscal discipline.
"We've always been conservative with our balance sheet, so we've always had excess cash for if we hit a bump in the road, or find an opportunity for capital expansion, we can accelerate growth," Hartung told CFO Dive in June.
His tactics have paid off; the company, per its earnings report, reached 11% comparable sales in January, alongside a 12% year-over-year gain.
"Early in the pandemic, I would have thought that you couldn't do that, post a double-digit comp on top of a double-digit [comparable sales], or could get 161 [new restaurant] openings," Hartung told Barron's. "That's really impressive."
The company will head into 2021 with increased spending on ingredients, store openings and advertising: it ran its first-ever Super Bowl ad on Sunday. "The valuation has always been high, but Chipotle has always been able to meet and exceed those expectations and raise the bar again," he said.
Despite continued COVID-19 surges around the country, Chipotle's digital business, in any region, has not dropped below 40%, which is Hartung's "rough floor" for online sales, he told Barron's.
The company will also continue on its plans to expand into digital-only stores, as well as further develop its drive-through "Chipotlanes" at existing restaurants. By the end of 2020, 170 U.S. locations included a Chipotlane.
"These results reaffirm our strategy of an accelerated pivot towards Chipotlane sites," Hartung said on the earnings call, according to Yahoo. "Not only will this enhance customer access and convenience, but [it will] increase new restaurant sales, margins and returns."
"It was controversial," Hartung said of the Chipotlanes to MarketWatch Wednesday.
Hartung said customers tend to associate Chipotle with the order-placing process: "passing by a row of ingredients like rice, beans and guacamole, choosing what they want, and watching as food is being prepared in the kitchen."
Though digital ordering and pick-up sales are through the roof, it eliminates the experience. "The idea of trying to transform into a digital experience or driving up to the window was, 'Are we talking about fast food?'" Hartung said to MarketWatch.
"The essence of Chipotle is not about drive-throughs, digital or delivery," he added. "Rather, it's [how] the food is sourced and made. Customers can have the convenience of the fast-food experience, but [with] elevated food."
