Chipotle Chiptopia rewards program
Chipotle's Chiptopia summer customer rewards program contributed to the chain's performance improvement.

DENVER — The introduction of a customer rewards program and the addition of a new menu item contributed to a modest improvement in performance at Chipotle Mexican Grill, Inc. during the second quarter ended June 30. Net income was $25,596,000, equal to 88c per share on the common stock, down 82% from $140,204,000, or $4.51 per share, in the year-ago period. Revenue was $998,383,000, down nearly 17% from $1,197,783,000.

Comparable restaurant sales fell almost 24% in the quarter, which was an improvement over a 30% drop in comparable restaurant sales in the first quarter.

Steve Ells, Chipotle
Steve Ells, founder, chairman and co-c.e.o. of Chipotle

“While we would like to see sales recovery occurring more quickly, we are optimistic that our Chiptopia summer rewards program, which launched on July 1, will encourage more guests to visit our restaurants and that this will help lead to a sustained higher sales recovery,” said Steve Ells, founder, chairman and co-chief executive officer, during a July 21 earnings call with financial analysts. “Though the program is just a few weeks old, we’re already seeing approximately 30% of all transactions participating in Chiptopia. We have seen further improvement of comparable restaurant sales and transactions with comp sales down about 21% in July and traffic improving. So that is now down to a negative mid-teens for July, so far.”

During the quarter, Chipotle added chorizo to the menu, which is expected to roll out to all restaurants by the end of the year. The item features a blend of pork and chicken, seasoned with paprika, toasted cumin and chipotle peppers.

“The introduction of a new menu item such as chorizo is unusual for us,” Mr. Ells said. “As you know, we have always maintained a very focused menu and rarely changed it. Instead, we focused on doing just a few things in our restaurants so that we can do them better than anybody else. But we have never ruled out additions or changes to the menu, and chorizo is one of the few changes that we have made to the menu in 23 years.”

Chipotle chorizo
Chipotle plans to roll out chorizo to all restaurants by the end of the year.

So far, chorizo has accounted for approximately 6% to 7% of entree sales in the restaurants where it is available, he added.

“Collectively, these efforts along with excellent operation are bringing customers back into our restaurants and our teams are working hard to provide an extraordinary experience in all of our restaurants, every day,” Mr. Ells said.

In the first six months of the fiscal year, Chipotle posted a loss of $836,000, which compared with net income of $262,845,000 in the first six months of the previous fiscal year. Revenue for the period was $1,832,842,000, down from $2,286,826,000.