- Chipotle Mexican Grill is extending the run of carne asada through the end of this year and into the first quarter of 2020.
- Carne asada is a more tender cut of steak that sells for 50 cents more than Chipotle's original steak.
- Carne asada was the brand's newest protein addition to the menu since chorizo in 2016.
After a successful launch of carne asada in September, Chipotle Mexican Grill said it is extending its run through the end of this year and into the first quarter of 2020.
The company says the premium cut of meat, originally introduced as a limited-time offer, is helping to drive new customers. Carne asada is a more tender cut of steak, sliced into thin strips rather than chunks and it is priced 50 cents higher than Chipotle's original steak, which already is one of the most expensive protein options customers have.
"We're incredibly encouraged by the customer response to carne asada and are exploring options to add this as a permanent menu item in the future," Brian Niccol, Chipotle CEO, said in a statement.
Carne asada was the brand's newest protein addition to the menu since chorizo in 2016.
On its third-quarter earnings call, executives had warned that the supply of carne asada could run out before the year's end but said the item could make a return to the menu.
Chipotle has long touted its strict supply chain standards, including offering responsibly raised beef with no antibiotics or added hormones. The company says it sources through farms rather than factories, which can limit its options for supply.
"Our supply chain team and our chefs worked with our beef suppliers to identify additional premium cuts that were both delicious and meet all of our food with integrity principles to deliver the carne asada experience customers have been enjoying," Jack Hartung, Chipotle chief financial officer, said in a statement to CNBC.
Chipotle shares, which have a market value of $20.7 billion, are up more than 72% year to date, through Monday's close. Earlier this year, the stock returned to the level it had been before a series of food safety issues several years ago, which had hurt sales. Since reaching that milestone, the shares went on to hit an all-time high of $857.90 in early September.
The company has been intentional in adding new items to its menu under Niccol, who took over as CEO in March 2018. In Niccol's previous role at Yum Brands' Taco Bell, he had been known for creative additions to the company's menu, which helped to drive sales and foot traffic.
At Chipotle, Niccol puts potential new items through a "stage gate process" to ensure the product can be executed properly in restaurants to give customers the right experience while making sure the item makes sense financially. New items like carne asada and the company's lifestyle bowls, which featured paleo and Whole 30-approved options in January, were presented as digital-first initiatives, helping to drive traffic to the company's digital ordering platforms.
Chipotle's loyalty program, Chipotle Rewards, which launched in March 2019, has 7 million members. These customers were the first to learn of the carne asada addition.
The push is working, as digital sales were up nearly 88% in the third quarter.
In a post-earnings interview last month, Niccol said the company was working on sourcing additional supply to keep carne asada on the menu even longer.
"The response from customers has been tremendous," he said. "We want to stay committed to our food with integrity principles, so the only way we can extend this is if we can get access to the right type of steak that meets our principles and continues to deliver on the premium experience that people are loving, so that's what we are balancing."
Beyond carne asada, the company is testing quesadillas, Queso Blanco and salads, Niccol said on the company's earnings call.
"These items are in various markets where we are gaining valuable feedback. … We're not going to roll out new menu items at the sacrifice of throughput, nor will we add complexity to current restaurants by overemphasizing new menu choices," he said on the call.
[Programming note: Chipotle CEO Brian Niccol will address CNBC's Evolve event next week. Register to attend at cnbcevents.com/evolve.]