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Actionable news in CMG: CHIPOTLE MEXICAN GRILL Inc,

If Queso Can’t Save Chipotle, Maybe iPhones Will

Chipotle introduced queso throughout all of its stores in mid-September.

Chipotle Mexican Grill patrons waited years for the company to finally introduce queso in its restaurants, and in the end the launch was fairly disappointing. Barron’s taste tests found Chipotle’s new queso to be bland, and analysts are mixed on whether the condiment will actually help the chain rebound.

Fortunately for Chipotle investors, though, the company is focused on non-queso improvements to its restaurants. And Maxim analyst Stephen Anderson thinks the company is doing some smart new things with technology that could help boost its stock by 38%, to $435.

The chain’s management recently talked about how it was doing a test of kiosk-based ordering in a few of its New York stores. This was one of the popular tech-oriented tactics that Panera introduced a few years back to help spur its turnaround. When consumers order via kiosk, they don’t have to wait in traditional lines. That tends to make for happier patrons.

Chipotle also made recent improvements to its mobile- and online-ordering tools, which could help increase the amount of tech-enabled sales. Only 7% of Chipotle’s sales came via some form of technology last year, but Anderson sees that portion rising to 12% by the end of this year and “high teens” by the end of next.

People tend to spend more when they order online, he notes. And, as with kiosk-based orders, those who buy their food online and in advance don’t have to wait in the regular line. That means they can get their food more quickly after entering the store, and it also leads to less congestion for those ordering lunch the old-fashioned way.

Plus, Anderson thinks there’s a possibility that new executives could steer the company toward finally introducing a permanent loyalty program, though Chipotle has so far denied that it was interested in doing so.

Big Picture: An analyst is optimistic about Chipotle’s ability to use technology to turn itself around.


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