Chipotle CFO says the chain can last a year with lower sales
Chipotle Mexican Grill Inc. is well positioned to ride out the COVID-19 storm that’s ravaging the U.S. restaurant industry, according to its chief financial officer.
“We can get through for many months or even a year at these kind of depressed sales levels,” CFO Jack Hartung said in an interview Wednesday, declining to provide sales figures. He said the disease outbreak is unprecedented for the industry, and that “everybody is losing a meaningful part of the business.”
Chipotle had $880.8 million in short-term investments and cash at the end of last year.
In the short term, the company is saving money by delaying new store development, halting executive travel and reconsidering the hire of project consultants. It’s also seeking rent deferrals for its restaurant locations and offices, Hartung said, noting that conversations with landlords are happening now.
“We don’t really need freebies, we just need deferrals,” he said. “We’d like some relief for a matter of a few months.”
While restaurants are quickly adapting to takeout and delivery only, sales have plunged. Researcher NPD Group estimates customer traffic plummeted 36% for the week ended March 22 compared with last year. Chipotle has temporarily closed 2% to 3% of its 2,600 restaurants worldwide now, including all those in Europe, and has furloughed a small percentage of its staff, Hartung said.
One area where the burrito chain is investing is in a 10% pay bump for hourly workers and bonuses for salaried managers of restaurants, which is costing the company about $15 million, Hartung said. They’ve also told employees that it’s OK to stay at home if they don’t think it’s safe to work.