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Chipotle Q4 2021 Earnings – Backtesting with Foot Traffic Data

R.J. Hottovy
March 3, 2022
Chipotle Q4 2021 Earnings – Backtesting with Foot Traffic Data

In its Q4 2021 financial results report, Chipotle announced that it was raising its long-term target to 7,000 U.S.-based locations – up from the previous goal of 6,000 stores. The company reported that its small-town locations have been “delivering unit economics at or better than traditional Chipotle locations.” The report also stated that 80% of the new venues will include Chipotlanes, as these digitally-enabled drive-thru/pick-up windows “continue to perform very well and are helping enhance guest access and convenience, as well as increase new restaurant sales, margins, and returns.” 

We dove into the brand’s visits in 2021 to see how well its foot traffic data validates Chipotle’s stated strategy. 

Strong Finish to 2021 

The company’s earnings reports showcased a strong finish to 2021, which is confirmed by location analytics data. Year-over-two-year (Yo2Y) visits have been up since June, and the brand finished the year with 11.2% more December visits when compared to the same month in 2019. 

Several factors contributed to the foot-traffic increase. Chipotle opened 215 new restaurants last year, bringing its store count to a total of 2,966 venues by the end of 2021 – and more restaurants naturally lead to more overall visits. Critically, however, the brand’s Yo2Y visits-per-venue metrics were also up, with an average of 1.3% Yo2Y increase in visits per venue for December 2021. This means that Chipotle is not only opening new restaurants, it’s also succeeding in filling the new locations with customers fast enough to maintain positive Yo2Y visits-per-venue levels. 

The update to the Chipotle Rewards program in late June also seems to have played a role in the brand’s success in the latter half of the year. The brand’s Rewards Exchange program, launched on June 22nd, expanded the existing loyalty program by giving customers more opportunities to redeem points for free products. 

July, the first full month with the new and improved Chipotle Rewards, also marked the first month with positive visits-per-venue growth in foot traffic since the start of the pandemic. And, except for a brief period at the height of the Delta wave, Yo2Y visits-per-venue have stayed strong, indicating that the changes to the loyalty program seem to be delivering the desired results.

Chipotle Leans Into Smaller Markets 

According to Chipotle’s CEO Brian Niccol, Chipotle’s decision to revise upwards its long-term store count goal from around 6,000 to at least 7,000 locations is “based on the success of small town opportunities that are delivering unit economics at or better than our traditional locations.” And the increase in profitability for the smaller market locations is not just due to the lower buildout and lease costs. Chipotle locations in smaller markets in fact see stronger visitation trends than Chipotle restaurants in large urban markets. 

Chipotle venues in the top 25 DMAs in the United States (which collectively represented a little more than half of the chain’s locations), received around 110K visits per location in 2021. While this figure is still ahead of the QSR and fast casual category average of just under 100K, it’s lower than the chain average of 121K visits per location for the same year. 

And these numbers also mean that Chipotle venues outside of the top 25 DMAs visit per location average almost 131K visits per venue –making a compelling case for looking to smaller markets as the path to 7,000 units overall, and Chipotle’s short-term plan of 235-250 planned openings for 2022.

Chipotlanes’ Success 

Another takeaway from Chipotle’s recent earnings report is the success of Chipotlanes, the brand’s digital order drive-thru/pick up lanes first introduced in late 2018. The company stated that the 80% of new restaurants will include a Chipotlane, and that “these formats continue to perform very well and are helping enhance guest access and convenience, as well as increase new restaurant sales, margins, and returns.”

Location data confirms Chipotlanes’ success. When looking at foot traffic data from 2021, Chipotle restaurants with Chipotlanes outperformed the chain average every quarter last year. These numbers reinforce Chipotle’s decision to include Chipotlanes in the overwhelming majority of new restaurants and to retrofit some of the existing venues with Chipotlane capacity.  

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