Chipotle CEO's top three goals for restaurant operations
Shares of Chipotle (CMG) are soaring on Friday after the company announced its plans for a 50-to-1 stock split. Yahoo Finance Executive Editor Brian Sozzi joins the Live Show to discuss his top three takeaways from his interview with Chipotle CEO Brian Niccol.
Firstly, Chipotle will be focusing on expansion, setting its sights on opening 315 new restaurants within 2024, totaling 7,000 locations across the United States. Secondly, the company will be looking to implement new technology to increase efficiency within their restaurants including food sensors and avocado pitters. Lastly, Brian Niccol has expressed his commitment to staying with the company and guiding it through its successful growth trajectory.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Angel Smith
Video Transcript
[AUDIO LOGO]
SEANA SMITH: Shares of Chipotle climbing over 20% so far this year as it gears up for its 50 to 1 stock split in June. Our Executive Editor Brian Sozzi had a chance to speak with the burrito chain CEO Brian Niccol about the company's year so far that has been very impressive. And, Soz, What did he have to tell you?
BRIAN SOZZI: Yeah. I can't believe Brian Niccol has been the CEO of Chipotle for 6 years. I still remember covering the day when he was announced as CEO. And going before that, I originally got to know him when he was at Yum Brands leading that Taco Bell brand and creating a lot of awesome campaigns. But nonetheless, some interesting takeaways from my chat with Brian. And the full piece will be in the Morning Brief newsletter on Sunday. It's just a taste of things to come in that piece. You can go to our home page and check that out.
But nonetheless, big focus right now by Brian and his team on new restaurant openings. When Brian started, this chain was at about 2,400 locations. They're at 3,400 right now. This year, they will open close to 315 new restaurants. Really a mind blowing number that not a lot of other competitors are doing. This will be the most restaurants Chipotle will have ever opened in a single year. Now Brian tells me he thinks he sees a road to 7,000 restaurants over time, mostly in the US, but I think increasingly overseas. I asked Brian if he thinks Chipotle can work in China. Potentially, the verdict isn't out yet. But again, he has a lot of experience in that Chinese market given all those years he spent at Yum.
Also, the company is pushing very aggressively into technology. And they've gotten a lot of attention from Chippy the robot. And now they've pulled back on Chippy because he told me it's hard to clean. They're starting to test the new machine that actually peels and cores avocados. But one of the interesting technologies that caught my attention, Seana, it's this new sensor-type technology. And it's hard to explain, but the bottom line is new sensors that may eventually go into Chipotle to help measure the amount of food going into the bowls and burritos. So something to watch there as well.
And last, but not least, I didn't-- Brian still a very young guy. This stock is up almost 600% since his tenure had outperformed, I believe, actually Apple and Amazon, which is just a mind blowing number. I don't think Brian is going anywhere anytime soon. I think he's very focused on delivering a lot more restaurants to this group, continuing to improve this culture, and ultimately, bringing a lot of people along for the great ride that has been Chipotle.
SEANA SMITH: And certainly he has just been a tremendous leader for the company. You don't have to look any further than that stock performance that you just cited there, just showing the steady increase that we have seen from Chipotle's business under his leadership. He's also been able to navigate extremely tough and challenging times. You talk about the fact that Chipotle was able to perform relatively well throughout the pandemic, post-pandemic. But then just looking ahead, Brian, I'm curious if he had anything to say or from your conversations that you've had with Chipotle executives in the past just how they're thinking about the wage hikes that are coming to California offsetting some of that and what they're learning in turn from that and applying that to their business going forward.
Because we were just talking to an analyst earlier this week who was saying that he actually doesn't really see it as a headwind for Chipotle at all.
BRIAN SOZZI: Yeah. Well, let's keep in mind-- a good quote, first I think here from Brian, on the number of restaurants he plans to open over time. And again, these restaurants will come at a time of rising wages. And I'm sure a lot of these restaurants, a lot more of them will be in California, which, of course, is a very large market for Chipotle. I don't think this is just a Chipotle thing. I don't think-- I think the whole restaurant industry is not a fan of wages potentially going up significantly in California to the point where maybe a lot of restaurant chains and franchisees don't make money. And this is an issue our very own Brooke DiPalma has been covering extensively. She will have more coverage on this throughout the year.
But again, this is going to be a problem not just for Chipotle. A lot of I think small business owners, small business owners in the state that operate these restaurants, McDonald's, Burger King, you name it, they're now going to-- are faced with significantly higher wages and might have to raise prices. And you think about, What does that do to traffic? Unclear.
SEANA SMITH: Yeah. So the analysts we were talking to earlier was making the argument that at least Chipotle is better positioned than some of those rivals out there. Atacado, that was the--
BRIAN SOZZI: Atacado.
SEANA SMITH: --name. I was trying to look it up as you were doing it.
BRIAN SOZZI: Love their food.
SEANA SMITH: I know. It's so impressive. All right. Soz. Great stuff. Thanks so much.
