Company Boosts Hiring While Expanding Openings
Chipotle Mexican Grill plans to capitalize on rising sales by ramping up restaurant development and hiring, with plans to open between 255 and 285 new locations during 2023.
CEO Brian Niccol told analysts during a quarterly earnings call Tuesday that the Newport Beach, California-based company boosted annual sales and profits during 2022 “while opening the highest number of new restaurants in six years, despite facing a challenging and fluid macro environment.”
Niccol said the operator of nearly 3,200 restaurants, all company-owned, sees a “tremendous growth runway” after opening 236 new locations in 2022, including a company-record 100 in the fourth quarter.
The CEO said the company stands by its goal set two years ago to have a total of 7,000 restaurants operating, which at the current pace of expansion would be reached within about 10 years.
Chipotle’s 2023 development plans include opening 10 new locations in Canada, which would be the highest single-year growth rate in percentage terms in that country, where there are currently a total of 25 Chipotles in Ontario and British Columbia. It is also looking to expand what is currently a limited presence in the United Kingdom, France and Germany.
While the Labor Department last week reported that the category that includes food service and hospitality was the nation’s largest creator of new jobs, Chipotle joins other dining chains facing challenges matching staffing to its expansion plans.
Plans 15,000 Hires
Chipotle last month announced plans to fill 15,000 positions primarily at existing restaurants, ahead of its annual peak March-to-May “burrito season.” These plans come as Niccol noted the company is still seeing wage and supply inflation of around 15%, lessened in part by menu price increases.
The CEO said supply chain disruptions have been easing, with significant reductions in “menu deactivations” that numbered in the hundreds during the peak of the pandemic as food ingredients for some items became difficult to obtain.
Restaurant analytics firm Placer.ai reported last month that Chipotle had among the strongest growth rates in customer traffic among fast-casual chains during 2022, compared with pre-pandemic 2019.
Placer.ai said Chipotle’s customer visits grew by 66.2% in the third quarter and 28.7% in the fourth quarter compared with 2019, while the overall fast-casual category saw visits shrink by 18.9% in the third quarter and decline by 27.2% in the fourth quarter.
Researchers said much of Chipotle’s growth can be attributed to technological investments including a ramp-up in locations that have a drive-up “Chipotlane” geared solely to pickup of food ordered online or on the Chipotle mobile app. “Chipotle is also expanding into smaller markets, where audiences are highly responsive and overhead is lower,” Placer.ai said.
Niccol told analysts that 80% of Chipotles opening during 2023 will include a tech-enabled Chipotlane, as the company also tests new automated technologies for grilling meat and frying tortilla chips among other kitchen functions. The CEO said digital sales, made through pickups and deliveries, accounted for about 39% of total sales in 2022, a figure that has grown over the past several years.
For its fourth quarter ended Dec. 31, Chipotle reported total sales rose 11.2% from the year-earlier period to $2.2 billion, with same-store sales rising 5.6%. Net income for the quarter rose 68% to $223.7 million.
The company reported full-year 2022 sales rose 14.4% from the prior year to $8.6 billion, with same-store sales increasing 8%. Net income for the year rose 38% to $899.1 million.