Chipotle Mexican Grill Inc (NYSE:CMG) Q3 2020 Earnings Conference Call - Final Transcript

Oct 21, 2020 • 04:30 pm ET

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Chipotle Mexican Grill Inc (NYSE:CMG) Q3 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
John R. Hartung

to make ongoing strategic investments in our people, in our business and in our communities, which we believe will benefit us for years to come. But we didn't buy back any stock in Q3.

We'll continue to evaluate the operating and economic environment each quarter and we'll return excess cash to shareholders when the environment is more stable and more predictable. Another area of strength for Chipotle is restaurant design and development, and during the third quarter we're delighted to have opened 44 new restaurants with 26 including a Chipotlene. We now have a total of 128 Chipotlanes, including five conversions. And performance for these formats continues to be stellar. The digital gap versus non-Chipotle restaurants remains around 10% and that's driven entirely by the higher margin, order ahead and pickup transaction. Also if you look at the sales of our Chipotlane cohort, of the 17 Chipotlanes that are in our comp base and, therefore, opened well before COVID, sales are over 10% higher than the non-Chipotlane comp restaurants from the same open period, while the more recent openings during COVID are actually 25% higher.

These results further reaffirm our strategy of an accelerated pivot towards Chipotlane sites going forward. And while I continue to expect about 60% of new restaurant with Chipotlane this year, our goal is to have more than 70% openings, including Chipotlane in 2021. Opening more Chipotlanes will not only enhance customer access and convenience but it also increases new store restaurant sales, margins and returns. It's hard to predict the external environment but if we assume there are no further COVID-related construction stoppages, we expect to have a sequentially similar or perhaps slightly higher number of openings in Q4. And while the current environment prevents us from being able to provide reliable new store opening guidance for 2021, our development team has built a very robust new store inventory, which under normal circumstances would be to opening around 200 restaurants next year.

As the permitting process and groundbreaks become more certain in the coming months, we'll provide as much visibility as we can around expected openings by quarter and for all of 2021. Longer term, we've remained confident in our ability to more than double total number of Chipotle restaurants in the U.S. In closing, I want to thank our incredible teams, who continue to collaborate and find ways to safely serve and delight our guests in the face of unprecedented conditions. With a strong brand, a team of committed employees and broad financial strengths, we feel well-prepared to weather any near term COVID-related headwinds and we remain excited about Chipotle's powerful economic model and, therefore, our long-term potential.

With that, we're happy to take your questions.