Chorizo’s nationwide rollout
On October 3, 2016, Chipotle Mexican Grill (CMG) announced that chorizo would be available in all its US restaurants as of October 4, 2016. That also happens to be National Taco Day.
Earlier, in June 2016, Chipotle introduced chorizo in five markets. The positive response prompted Chipotle’s management to extend the new menu item to other markets as well. Steve Ells, chairman and co-CEO (chief executive officer) of Chipotle, said, “The reaction to chorizo in the cities that have had it has been overwhelmingly positive, so we’re making it available in all of our restaurants across the country.”
Chorizo, a blend of seasoned pork and white-meat chicken, is available in burritos, tacos, burrito bowls, and salads. Chorizo can also be combined with any of Chipotle’s other menu items.
Could Chorizo improve Chipotle’s SSSG?
Since the outbreak of E. coli in October 2015, Chipotle’s same-store sales growth (or SSSG) began falling. In 1Q16, SSSG fell to -29.7%. But the company’s efforts to enhance its food safety procedures and market aggressively with special promotions improved SSSG in 2Q16 to -23.6%.
The company’s Chiptopia Summer Rewards program from July 1, 2016, through September 30, 2016, is expected to improve SSSG in 3Q16. Analysts are expecting Chipotle to post SSSG of -17.2%, 1.6%, 13.5%, and 9.5% in 3Q16, 4Q16, 1Q17, and 2Q17, respectively.
In 2Q16, Chipotle’s peers Panera Bread (PNRA), Shake Shack (SHAK), and Qdoba Mexican Eats, which operates under the umbrella of Jack in the Box (JACK), are expected to post SSSG of 2.9%, 1.5%, and 1.4%, respectively.
Chipotle forms 0.44% of the holdings of the iShares Russell Mid-Cap Growth (IWP).