Chipotle's Big Leap in Digital

1Q19 digital sales (delivery, order ahead & catering) grew +101% y/y to 15.7% sales mix & benefit from Chipotle’s free delivery bowl offer which ran from 12/17 to 1/7 (nearly half of the guests taking part in this offer were new or lapsed users). As digital mix has touched 30% in some stores, corporate believes there remains strong growth potential in this channel. 

Self-service mobile order pickup shelves are now available in all relevant restaurants & are also useful in facilitating delivery (delivery drivers no longer wait for orders, rather they can find delivery orders waiting for them on the shelves). 
Digital make lines are in 1,300 restaurants & should be rolled-out to all applicable restaurants by the end of 2019. 
Corporate reports very little guest overlap between its own in-app delivery and 3rd party delivery partner apps.
2/3 of delivery sales are incremental & this channel is accretive to margin.  

Domino's on Delivery Aggregators

Domino's corporate believes that as the restaurant industy isn't growing any faster than it was before the entrance of the delivery aggregators, these players are not adding incremental sales but rather pulling profits from restaurant companies. This suugests that the aggregator model is not sustainable over the long-term.


Restaurant Tech Stocks?

  • Investors see a lot to like about restaurant stocks as indicated by a steady climb in public market valuations according to data from Hedgeye. 
  • While this maybe partially attributable to a steady stream of private equity buyouts over the last couple of years with valuations as high as 19x, certainly public stock investors don't believe that all remaining stocks will receive such rich bids?
  • Another explanation is that investors are focused on growth in digital & off-premise with the belief that leading-edge restaurant stocks are the new FANGs worthy of tech stock valuations... 


Other Spending Priorities = ↑ Demand for Deals



Another take on value