dailynewsnblog
Chipotle (CMG) has leaned into the protein craze as it navigates a difficult consumer environment.
“The protein cup has been a huge success,” Chipotle CFO Adam Rymer told Yahoo Finance on Thursday. “And we actually are up double digits on not just protein cups, but also people getting double protein on their entrees because Chipotle is the place for clean protein.”
The launch of its add-on protein options, such as a four-ounce cup of adobo chicken, helped boost the company’s sales in the first quarter. Chipotle posted a same-store sales increase of 0.5%, more than the 0.9% decline the Street expected.
“What we’re really doing is really leaning into what our consumers want from Chipotle,” Rymer said, adding that chicken al pastor, which returned for a limited time for the third time this quarter, saw its best performance yet.
Within the new protein options, the company also launched a high-protein taco at a lower cost of $3.50 and is testing a happier hour from 2 p.m. to 5 p.m. with tacos at $2.56 each.
All that protein comes at a cost, though.
Chipotle said its input costs for food, beverages, and packaging increased to 29.6% of total revenue in the first quarter, primarily driven by inflation in beef and transportation prices.
The company offset some of those higher expenses by raising prices during the quarter, though by less than 1%, which the CFO said is “really unheard of in the restaurant industry right now.” Chipotle’s costs were also partially offset by lower prices for dairy and avocados.
Chipotle said it’s being extra cautious about price hikes right now as US consumers face the highest gas prices in years and sentiment falls to record lows. As of April 30, the national average gas price surged to $4.30 per gallon, with some states seeing average prices above $6 per gallon.
“There’s just a lot of noise out there … consumer sentiment is low,” Rymer said. “The gas prices aren’t helping, … all of these things are having an outsized impact with our consumers, specifically the younger consumer and the lower income, which has been under the most pressure.”
“We’re going to continue to invest in our value proposition, especially in the near term, because we think that is the right thing to do in this environment,” Rymer added. “We’re really taking a slow and measured approach to pricing.”
One other way Chipotle hopes to seal the deal with consumers is by getting them in and out the door quickly, with lines of a minute or less.
“There’s something … that’s amazing about Chipotle of coming in and knowing when you see 10 or 15 people in line, you’re only going to be in that line for a minute or less, and you’re going to get through very efficiently, but also in a very hospitable way with smiles going down the line,” he said.
