Dive Brief:

• Chipotle announced Tuesday it is extending its carne asada through the end of this year and into Q1 2020. The menu item was originally introduced as a limited-time offering in September.  
• The company said in a press release that the protein continues to exceed expectations and drive new customers. 
• CEO Brian Niccol also stated that the restaurant chain is considering making the protein a permanent menu item.

Dive Insight:

Chipotle’s carne asada was the chain’s first major protein introduction since chorizo all the way back in 2016, and its strong performance bodes well for consumer reception of the item as a permanent menu option. 

The company likes what it sees from the product as well. During its Q3 earnings call, Niccol noted that carne asada contributed to its 11% comps and drove higher checks and new traffic. 

As with all of its menu products, Chipotle is touting its carne asada sourcing, which is from farms versus factories. That stringent sourcing, however, has led to some supply issues. In late October, Chipotle started running out of its carne asada and announced it would begin sourcing additional ingredients to finish out the year. This could pose a bit of a challenge with a potential broader rollout, as noted during the company’s Q3 earnings call. CFO Jack Hartung noted that the company would have to work on its supply to ensure it fit Chipotle’s “Food With Integrity” standards.

Other chains have had to deal with supply chain issues this year, including Taco Bell with its tortillas and Popeyes with its chicken sandwiches. Navigating such a shortage for a high-demand product could erode consumer confidence in the brand. 

But Chipotle is intentional with its product rollouts, calling it a “stage-gate” process. Unlike most quick-service restaurants that rely heavily on limited-time offerings to boost traffic, Niccol said Chipotle takes more of a “seasonal offering” approach that attracts both new users and brings back lapsed consumers. During the Q3 earnings call, he said the company is not going to roll out new menu items that will add complexity to restaurants by overemphasizing new menu choices, for example. 

While this approach differentiates Chipotle in a heavy LTO environment, both methods seem to work. According to the NPD Group, LTOs and seasonal offers tap into a base of loyal buyers while also boosting sales and serving as a competitive edge. 

In addition to potential supply challenges, the carne asada is a more expensive cut of meat, which “puts a little bit of pressure on food costs,” as Niccol explained during the earnings call. Still, the product retails for 50 cents higher than the company’s traditional steak product, so the company is in line with its margins while generating new and lapsed traffic, no doubt incentive enough for Chipotle to find it a permanent spot.  

Analysts from BTIG also like the idea of extending the carne asada, writing that it will “allow the concept to be more creative on the menu and in turn drive sales” after Chipotle’s Q3 earnings call.