ELAINE ANALYSIS

Chipotle Mexican Grill (CMG) Q3 2022 Earnings Call Transcript

   

Chipotle Mexican Grill's strategy yields great result for Q3, leveraging on technology and reward program, offset inflation in labor and food cost with price increase.

Is the strategy sustainable going forward if inflation continues to rise?

 

Findings from ELAINE Analysis:-

Key Focus:

"Now let me provide an update on each of these strategies, which include: number one, running successful restaurants with a people accountable culture that provides great food with integrity while delivering exceptional in-restaurant and digital experiences; number two, amplifying technology and innovation to drive growth and productivity at our restaurants and support centers; number three, making the brand visible, relevant and loved to improve overall guest engagement; number four, expanding access convenience by accelerating new restaurant openings; and number five, sustaining world-class people leadership by developing and retaining diverse talent at every level..."

The donut chart shows a large proportion of tailwind.

  Top relevancy abstractions in the HLA table shows the related context on the momentum:

    (food,digital,world-class)
    (food,restaurants,world-class)
    (food,world-class)
    (restaurant,access,world-class)
    (restaurant,food,world-class)
    (restaurant,technology,world-class)
    (restaurants,brand,world-class)
    (restaurants,restaurant,food,world-class)
    (restaurants,restaurant,world-class)

When applying creative thinking, it implies "image building" on areas related to digital, food, technology, and brand. In terms of labor, CMG recognizes labor can pose a problem as new restaurants are opened. It is promoting from within as seen in the following excerpts:

"...promote more than 1,500 managers to open our new restaurants..."

"Labor is unpredictable because we thought it was settling into this normal kind of mid-single-digit range, and that's what I'd like to say. And yet as we did analysis, we found these 700 restaurants. So it's about 1/4, a little more than a 1/4, a little less than 1/4 in a restaurant that we're having to take $1, $2, $3 increase in starting wages just to make sure that the restaurants were staffed. "

 

  Further down the HLA list, abstractions on (restaurants, trends, income) shows inflation has impacted some consumer frequency.

"... In the third quarter, we continue to see a widening of trends by income level with the lower income consumer further reducing frequency."

 

In summary, CMG's strategy works well as long as consumer spending remains strong.