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Chipotle Stock Rises on Loyalty Program Launch

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The announcement

Today, Chipotle Mexican Grill (CMG) launched its loyalty program, Chipotle Rewards, on a national level. To make the program more attractive, Chipotle announced it would give away $250,000 per day to 25,000 Chipotle customers from March 12 to March 15. Chipotle has partnered with PayPal’s Venmo, a mobile payment service provider, for both the campaigns.

Customers can sign up using the Chipotle app or through its website at Chipotle.com/Rewards. Customers will earn ten points for every $1 spent either in the restaurant or online. After reaching 1,250 points, the customer receives a free entrée. The company also offers extra-points days, which would aid customers in accumulating points more quickly. On the first purchase, a member would receive free chips and guacamole.

Chipotle members can also win anywhere between $1 to $500 by submitting their phone number, which is associated with their Venmo account, to ChipotleRewardMe.com.

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Chipotle’s chief technology officer, Curt Garner, stated, “Similar to how we build restaurants where people live and work, we want to have a presence in all of the places our customers spend time digitally. Chipotle Rewards is another access point for consumers; a way for guests to engage with our promise of real ingredients prepared fresh daily and a way for us to say thank you for joining our mission of cultivating a better world.”

Stock performance

The launch of the new loyalty program appears to have increased investors’ confidence. Today, Chipotle stock hit a new 52-week high of $635.60 and was trading at $632.65 at 2:45 PM EST, which represents a rise of 2.6% from its previous day’s closing price.

Chipotle has returned 42.9% YTD as of March 11. During the same period, Shake Shack (SHAK) and McDonald’s (MCD) have returned 15.9% and 2.0%, respectively. The Consumer Discretionary Select Sector SPDR ETF (XLY), which invests ~8.3% of its holdings in restaurant and travel companies, has returned 11.0% YTD.

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