Three Reasons Chipotle’s Business Is On Fire

ASHLEY LUTZ

JUL. 22, 2014

Chipotle Instagram

Chipotle is thriving.

Shares are soaring after the company reported earnings that exceeded estimates.

The company’s strategy has helped it overtake competitors,Brian Sozzi at Belus Capital Advisors wrote in a note to clients earlier last year..

Chipotle is even eroding McDonald’s market share despite being a much younger company. 

Sozzi shares a few reasons why Chipotle is dominating.

1. Sticking to a classic menu. While McDonald’s and Taco Bell tack on new menu items to entice customers, Chipotle has stuck to the same menu since it opened. The menu at McDonald’s has grown 70% since 2007, Bloomberg reported last year. Chipotle does a few things really well, making it easier to execute and reduce customer wait times.

2. Making lines faster. Chipotle has aggressively worked to reduce wait times during peak periods. Meanwhile, McDonald’s is struggling with the longest drive-thru wait times in decades. Competitor Panera Bread has also dealt with a customer service issues, and has replaced some workers with kiosks. Overloaded menus make it difficult for operations to run smoothly, Sozzi says. 

3. Emphasizing an ethical menu. Chipotle is in the process of eliminating GMOs from its menu, and has long boasted about its antibiotic-free meats. As a result, “people feel better about eating at Chipotle and share with others, personally or on social media, that positive experience,” Sozzi writes.