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Why Chipotle Mexican Grill Stock Climbed 17% in March – The Motley Fool



What happened

Shares of Chipotle Mexican Grill (NYSE: CMG) gained 16.92% in value last month, according to data from S&P Global Market Intelligence.

To be clear There was no company-specific news to explain the jump in stock price. What's more, investor optimism is increasing about Chipotle's growth prospects after a better-than-expected fourth-quarter earnings report in early February.

-store sales trends through the first quarter based on channel checks.

 An overhead view of a burrito bowl sitting on a wooden table.

IMAGE SOURCE: GETTY IMAGES

So what

Chipotle seems to have completed its turnaround after the mess it got itself in a few years ago about food safey issues. In the last quarter, comparable-store sales showed a significant improvement, up 6.1%, compared with just 0.9% in the year-ago quarter.

The recent performance is particularly encouraging, given the increasing competition in the restaurant industry as consumers are getting more selective and digital delivery is providing more options.

Management has made strides building its "culturally relevant" brand image by using social media and traditional media channels. Chipotle received 20% more digital impressions in 2018 without increasing marketing expense.

Now what

With more consumers getting more picky about the food they eat, Chipotle's brand, which is centered on "great taste and real ingredients," should help the restaurant chain distinguish itself in a crowded market.

Investors should keep their eye on digital sales, which accelerates in growth last quarter to 66% year over year and made up 10.9% or total revenue. Management is focused on the short term on continuing to roll out digital ordering and pickup in more restaurants to remove friction and reduce time in the ordering process, which should have a big impact on sales performance.


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