Brian Niccol
Chairman and Chief Executive Officer at Chipotle Mexican Grill
Thanks, Ashish, and good afternoon, everyone. 2021 was an outstanding year for Chipotle, highlighting the organizational strength and resiliency of our brand. Despite an unprecedented environment, our employees remain passionate about their work, dedicated to delivering excellent guest experiences and aligned with our purpose and values. Our business is as much about people as it is about food, and I strongly believe that we have the best in the industry. I'm very grateful for our team members' monumental efforts. And together, we accomplished many incredible things and accelerated business momentum, all of which was fueled by our multipronged growth strategy.
For the fiscal year, this resulted in sales growing 26% to reach $7.5 billion driven by a 19.3% comp; digital sales of $3.4 billion, which grew 25% versus the prior year; restaurant-level margin expanding 520 basis points year-over-year to reach 22.6%; adjusted diluted EPS of $25.42, representing 137% growth over last year; and we opened 215 new restaurants.
I'm also delighted with our fourth quarter performance even with the surge in Omicron cases that began in December. For the quarter, we reported sales of $2 billion, representing 22% year-over-year growth, which was fueled by a 15.2% increase in comparable restaurant sales, restaurant-level margin of 20.2%, was 70 basis points higher than the 19.5% we reported last year; earnings per share adjusted for unusual items of $5.58, representing an increase of 60% year-over-year; digital sales growth of nearly 4% year-over-year, representing 42% of sales; and we opened 78 new restaurants, including 67 with the Chipotlane.
We're encouraged by the recent performance but really excites us with the longer-term opportunity as we believe our powerful economic model will deliver best-in-class returns while achieving AUVs well beyond $3 million and significantly expanding the number of Chipotle restaurants in North America, which I'll elaborate on shortly.
There's no doubt in my mind that our five key strategies still have a long runway and are positioning us to win today while we create the future. We've revamped them slightly to reflect this transitioning from our turnaround phase to a sustainable growth base. These now include: number one, running successful restaurants with people, accountable culture that provides great food with integrity while delivering exceptional in-restaurant and digital experiences; number two, sustaining world-class people leadership by developing and retaining diverse talent at every level; number three, making the brand visible, relevant and love to improve overall guest engagement; number four, amplifying technology and innovation to drive digital growth and productivity at our restaurants and support centers; and number five, expanding access and convenience by accelerating new restaurant openings.
Let me provide a brief update on each of these, starting with restaurant operations. The key to happy customers is a wonderful guest experience that provides consistently great-tasting food prepared and served quickly. This hasn't been easy, especially if the number of COVID cases spiked and, at times, impacted our staffing capabilities. But we're fortunate to have amazing employees at our restaurants who have stayed focused on safety, reliability and excellent culinary while adapting seamlessly to the dynamic environment. Their execution, whether it be on new menu introductions or managing the balance between digital and in-restaurant orders, has been exemplary.
As always, throughput remains a key focal area and something that we're determined to improve, especially as more guests come back to the front line. The critical success factor is ensuring we have proper staffing, which is currently a challenge for many companies. However, ongoing investments in our people, including competitive starting rates, enhanced benefits, debt-free degrees, development programs and transparent career progression opportunities, are resulting in better employee recruitment and retention as well as allowing us to make progress on labor challenges. But we know there's more work to do, especially to support our future growth. As a result, we are focused on increasing our staffing stability through investing in human capital technology that will enhance our hourly team member experience.
Specifically, we are in the process of implementing a new digital scheduling program as well as upgrading our learning management portal. Also, I know we've mentioned this before, but it's worth highlighting again the importance of the GM role. Their leadership is crucial in executing the fundamentals of our business and setting the standard for how we run great restaurants every day. Additionally, our GMs helped grow the brand and the careers of countless team members, many of whom end up being top-performing leaders in our organization. In fact, during 2021, 90% of our restaurant management roles were internal promotions. Overall, we've promoted almost 19,000 team members in 2021. Our goal is to develop and retain diverse talent at every level of the organization and be the employer of choice, a message we will emphasize at our all-manager Conference in March. After all, our employees need to be ready to support the consistent demand our talented marketing team creates by making Chipotle more visible, more relevant and more loved. This is done using different advertising channels, including traditional media, to enhance brand awareness and stay relevant.
A wonderful example is our short animated film called A Future Begins, which is a sequel to our award-winning 2011 film Back To The Start and shines a light on the modern-day challenges the next generation of farmers are facing. While many young farmers value sustainability and ethics and farming like we do, they are struggling with new problems like climate change, technology costs and access to farmland. Launching this film is one of the ways that we are raising awareness of our mission to influence the 2023 farm bill that would facilitate equitable access to up to 1 million acres of land for the next generation of farmers.
We also utilized creative social media to successfully drive culture, drive difference and ultimately drive a purchase. We celebrated the 21-year anniversary of Boorito by providing $5 digital orders and serving up $1 million in free Booritos through a virtual Chipotle restaurant on roadblocks. We're the first restaurant brand to create a virtual experience on the interactive roadblocks platform, which resulted in Halloween 2021 having the most digital transactions of all time at Chipotle. This is a great illustration of us reaching consumers in a unique way to build sales today and the brand for tomorrow.
Enhancing our marketing efforts is a consistent cadence of two to three new menu items per year, using a disciplined approach to innovation. Not only do these items help bring new guests into the Chipotle family, but they also drive frequency with existing users and give us another opportunity to highlight the brand.
In 2021, we launched cauliflower rice in January, followed that with quesadillas in March and, finally, debuted smoked brisket in September. All of these new items performed very well, driving an increase in both check size and transactions. In 2022, we have already launched plant-based chorizo for a limited time across our U.S. restaurants. This entree is made using all real fresh ingredients growing on a farm, not in the lab, and proves that you don't have to sacrifice flavor to enjoy a vegan or vegetarian protein. It is off to a terrific start and is helping drive cultural buzz for its health and environmental benefits.
And there's more on deck. Pollo Asado, the first menu innovation with chicken in our 28-year history, has been successfully validated as part of our stage-gate process, and our culinary team is in the early stages of developing other exciting menu items. So stay tuned.
Another important growth driver that accelerated during the pandemic has been our technology transformation, which is helping Chipotle become a real food-focused digital lifestyle brand. During the fourth quarter, digital sales grew 4% year-over-year to $811 million and represent 42% of sales. We're pleased to see our digital sales dollars continue to grow despite lapping tough comparisons, and our overall digital mix remained steady in what seems like a new normal.
Incredibly, our full year digital sales of $3.4 billion is nearly 3.5 times what we did pre-COVID in 2019. Digital has proven to be sticky as it's a frictionless and convenient experience that has been aided by continuous investments, and you will likely see us increasing technology enablement for our restaurants and support centers to amplify innovation, enhance the customer experience and optimize efficiencies to improve operational execution.
As a result of this pandemic, many new consumers were introduced to Chipotle via our digital channels and are now using us for alternative and, at times, incremental occasions. Having two large and growing businesses that are supported by separate make-lines makes it easy for guests to access Chipotle through different channels and is a key point of differentiation. Currently, about two-thirds of our guests use in-restaurant as their exclusive channel, with the remainder using Chipotle's digital ecosystem to conveniently access our real food. This dynamic gives us several future opportunities, including adding more guests, converting more of our in-restaurant guests into higher frequency digital users and leveraging our expanding loyalty program.
We now have more than 26.5 million members in our rewards program, which is a key enabler of our digital flywheel. We're focusing a lot more on personalization by creating journeys, primarily for new and at-risk customers that can influence guest behaviors and ultimately drive more frequency.
As the program grows and we gain more experience, we are constantly learning, evolving and optimizing. For example, offering greater customization and flexibility to redeem rewards as well as gamifying the program with personalized challenges and badges that helped drive engagement and deepen relationships with our guests. Not only have we seen strong positive responses from our most loyal fans, but even more exciting is that these program enhancements have increased engagement from our medium and low-frequency guests. We are delighted with our progress to date and believe ongoing investments and further leveraging of data-driven insights will make us even better.
Our last strategic driver is to expand access and convenience, which today is the number one request from consumers. And we're listening. I'm excited to share that over the long term, we now believe we can operate at least 7,000 Chipotle restaurants in North America, up from our prior goal of 6,000 based on the success of small-town opportunities that are delivering unit economics at or better than our traditional locations. We're also in the early stages of testing alternative formats, including seam locations, which, if successful, could further expand our addressable market.
Additionally, given healthy and improving cash-on-cash returns, we are building a real estate pipeline that will allow us to accelerate new unit growth to be in the range of 8% to 10% per year, with greater than 80% of new restaurants having a Chipotlane. And of course, we continue to look for ways to enhance convenience with Chipotlanes, alternative formats, delivery and catering to provide many ways for our guests to Chipotle.
In closing, I can't thank our employees enough for everything they've done to elevate the brand and cultivate a better world for each other, our guests and our communities no matter what external restrictions came our way in 2021. As I've said before, challenges create opportunities, and we are now in a much stronger competitive position than we were two years ago.
While we're still navigating through what we all hope is the last phase of this pandemic, I look forward to the future with optimism and can't wait to see what 2022 holds for Chipotle.
Okay. With that, here's Jack to walk you through the financials.
