The outlook for restaurants in 2017 is daunting: “Restaurant operators are in a position to alter the forecast, but will need to differentiate themselves,” says Bonnie Riggs, NPD’s restaurant industry analyst. “In the year ahead, it will be critical for them to stay relevant in consumers’ minds, focusing on innovative products, unique promotions, competitive pricing, stating the benefits of eating at restaurants versus home and delivering an enjoyable experience.”
Chipotle Mexican Grill is recovering after seeing comparable store sales plummet 20 percent in the wake of food contamination problems in 2015. Even suffering through the year that it did, Chipotle still opened more than 240 new locations.
But founder Steve Ells, who took over the helm after the company dropped its co-CEO management structure, wants to do better. “As I look at how we’re recovering, it’s far too slow for me,” he said. And, he told shareholders, “In the upcoming year we intend to continue to simplify and improve our restaurant operations, utilize creative marketing to rebuild our brand and further roll out our digital sales efforts.”
His efforts are taking hold. In this first quarter of this year, same-store sales grew 18 percent as revenues increased 26 percent to $1.1 billion, and there were earnings of $46.1 million compared to a $26.4 million loss in the prior year. Chipotle also opened 57 new locations in the period.
“This is an indication that Chipotle should be through the worst of the fallout from its food safety issues and can now focus on expansion,” says Simon Negri, partner in A.T. Kearney’s consumer products and retail practice.