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Chipotle (CMG) Upgrades Loyalty Program to Attract Customers

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Chipotle Mexican Grill, Inc. CMG recently announced the first major upgradation in its loyalty program since its debut in 2019. The company has introduced a new video game called Chipotle Race to Rewards Exchange. Following the news, the company’s shares gained 1.5% on Jun 22.

Following the changes, customers can earn more reward points across its entire menu. Customers can also redeem reward points more quickly. Previously, Chipotle reward points went toward free entrees. However, customers can now exchange reward points for more than fifteen different reward options, which include free guac, drinks and Chipotle Goods. For every $1 spent, customers can get 10 reward points.

Chipotle, which has nearly 23 million Rewards members, has also allowed point redemption to support the company’s non-profit partners such as The Farmlink Project, National Young Farmers Coalition, as well as the National Urban League.

In an effort to promote the changes to its reward program, the company’s new video game will go live for 48 hours on Jun 23, at 12:01 p.m. ET. The winner will win a standard 2021 Tesla Model 3. Chris Brandt, Chief Marketing Officer said, “The new Chipotle Race to Rewards Exchange video game is a fun way to demonstrate the speed at which our loyalty members can now earn rewards.”

Zacks Investment Research
Zacks Investment Research

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Stock Performance

In the past year, the company’s shares have surged 38.1%, in line with the industry’s rally. Notably, digitalization played a crucial role in sustaining growth for restaurant operators amid the coronavirus pandemic. Moreover, initiatives like redesigned online ordering site, online payment for catering, meal customizations and collaboration with third-party providers for delivery bode well.

Moreover, impressive comps performance continues to drive growth. Despite the pandemic, the company reported comps growth for the third straight quarter. Comps in the first quarter 2021 increased 17.2%, following growth of 5.7% in the fourth quarter of 2020. Notably, reopening of dining rooms, introduction of new menu items, effective marketing strategies and strong digital sales contributed to the company’s results. It anticipates comps in the range of the high 20% to 30%, for the second quarter 2021. Notably, the company expects lower marketing investments and normalizing of quesadilla incidents for the ongoing quarter.

Zacks Rank & Key Picks

Chipotle currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the same space include Dine Brands Global, Inc. DIN, Texas Roadhouse, Inc. TXRH and Fiesta Restaurant Group, Inc. FRGI. While Dine Brands and Texas Roadhouse sport a Zacks Rank #1, Dave & Buster's carries a Zacks Rank #2 (Buy).

Dine Brands’ 2021 earnings are expected to surge 269.3%.

Texas Roadhouse has a three-five year earnings per share growth rate of 10%.

Fiesta Restaurant earnings in 2021 are likely to witness growth of 400%.

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