Chipotle's founder, chairman and CEO Steve Ells said in the conference call that strong profits, comparable store sales and the success of the expansion program all flowed from a strategy the company has been pursuing. The key element of the strategy is to "focus on just a few things and to try to do them better than anybody else," Ells explained.
According to Ells, the strategy includes reviewing a host of ideas for improving the Chipotle restaurants' performance, adopting some ideas and rejecting others. For example, the company has passed on the idea of serving desserts and breakfasts but has adopted other ideas, such as changes in store design and equipment. Ells said that the company's efficiencies enable it to invest more in food, "buying increasingly high quality ingredients, and improving how we prepare our food, designing more efficient equipment and optimizing elements of our restaurant design."
As a result, Chipotle was able to report that for the second quarter, net income climbed 85.1% to $20 million and rose 81.8% to 60 cents on a diluted per-share basis. Comparable restaurant sales increased 11.6% and have risen 10% during the first two quarters of the year as total revenue increased 33.9% to $274.3 million for the second quarter.
Another point Ells cited in the company's strategy was its emphasis on "cooking great quality raw ingredients." During the second quarter, the company continued a program called Food With Integrity that now has 73% of its restaurants serving naturally raised chicken and 46% serving naturally raised beef, in addition to the 100% naturally raised pork already served in its restaurants.
Chipotle, which opened its first restaurant in 1993,operates 640 locations.
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