Mary Knox Merrill | The Christian Science Monitor | Getty Images The University of Washington is moving all of its in-person classes and exams to online, starting Monday, as the state deals with a large uptick in COVID-19 cases. It may be the first U.S. public university to do so because of the outbreak. The […] More

Chipotle Mexican Grill is looking to smaller towns to fuel North American unit growth.
On Tuesday, the restaurant chain told investors that it’s expanding the long-term goal for its North American footprint from 6,000 locations to 7,000 units.
The chain benefits from cheaper leases in small towns but without seeing a drop-off in customer demand.

Small towns like big burritos, and it’s fueling Chipotle Mexican Grill’s development strategy in North America.
On Tuesday, the restaurant chain told investors that it’s expanding the long-term goal for its North American footprint from 6,000 locations to 7,000, largely due to its success in smaller towns. For comparison, McDonald’s has 13,443 restaurants in the U.S. alone, although the overwhelming majority are operated by franchisees. At the end of 2021, Chipotle had 2,966 restaurants worldwide  — the bulk of which are company owned and in the U.S.

Shares of Chipotle were up nearly 9% in morning trading Wednesday after the company topped Wall Street’s earnings estimates and shared its new development targets.
“We expected accelerating unit growth in the coming years, but the magnitude is greater than we anticipated,” BMO Capital Markets analyst Andrew Strelzik wrote in a note to clients. “The higher return small market opportunity is interesting as we have seen similar dynamics work well for others in the space.”

A woman wearing a facemas exits a Chipotle Mexican Grill restaurant with her takeout order on January 14, 2021 in Monterey Park, California.
Frederic J. Brown | AFP | Getty Images

In 2022, the chain is planning on opening 235 to 250 new locations. Starting in 2023, it thinks it can accelerate its pace of new units to a range of 8% to 10% a year, citing improving returns on the money it’s investing. More than 80% of the new restaurants will include “Chipotlanes,” the drive-thru lanes dedicated to picking up only digital orders.
“What Chipotlane is also allowing us to do is go into these small towns, where we have another convenient access point,” CEO Brian Niccol said on a conference call with analysts. He defined “small towns” as areas with populations of 40,000 or more people.
Many up-and-coming restaurant chains, like Sweetgreen and Cava, have begun shifting their focus to suburban areas, but Chipotle is entering the next stage of growth for its footprint as it opens locations deeper in the suburban sprawl of the U.S. and Canada.

Chipotle Chief Restaurant Officer Scott Boatwright credits Chipotle’s popularity to the marketing strategy under Niccol, who became CEO four years ago after a successful stint leading Yum Brands’ Taco Bell. Fellow Taco Bell alumnus Chris Brandt took the reins as chief marketing officer of Chipotle and began spending on traditional advertising, like television commercials. The company even ran its first-ever Super Bowl ad last year.
“Now we have a national presence,” Boatwright said in an interview. “I think these smaller communities, they recognize the brand and see it on social [media], on television, and folks are really coming out in throngs in these smaller communities that we’ve struggled in historically.”
Boatwright said the chain benefits from cheaper leases in small towns. And despite serving smaller populations, restaurants in smaller towns are still seeing strong sales.
“It’s a really favorable position to be in,” he said.
Correction: Scott Boatwright is Chipotle’s chief restaurant officer. An earlier version misspelled his name.

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Dollar General and Dollar Tree are among the retailers that could benefit after the COVID-19 pandemic subsides, JPMorgan analyst Matthew Boss said Thursday.  “Discounters, dollar stores, off-pricers and strong global brands I actually think could emerge stronger from this, take market share, use their size and scale,” Boss said on CNBC’s “Halftime Report.” On the contrary, […] More

In this articleVACQRocket Lab’s Photon satellite in orbit around the Earth.Rocket LabRocket Lab announced a deal with start-up Varda Space Industries on Wednesday to provide three Photon spacecraft to support Varda’s first in-space manufacturing missions beginning in 18 months.”In simple terms, we are the real estate and the utilities for the space factory,” Rocket Lab CEO Peter Beck told CNBC. “We really provide all of the utilities, the power, the pointing and communications and everything to enable the little factory to work away and do their thing.”Beck declined to comment on the value of the contract, noting that it “is commercially sensitive to Varda and us.” Varda co-founder Delian Asparouhov told CNBC that purchasing “Photon lets us have the most aggressive schedule and the tightest budget.””We’re thrilled to be purchasing a platform that already has some flight heritage, and will have even more by the time we launch,” Asparouhov said.Rocket Lab will deliver the first Photon spacecraft for Varda in the first quarter of 2023. The company is expected to deliver the next two spacecraft the year after, and there will be an option for Varda to buy a fourth Photon. The early Varda missions are planned to be three months long, Rocket Lab said, from launch to reentering the capsule with the manufactured materials. Beck highlighted that the Varda Photon missions won’t launch on a Rocket Lab rocket, and instead are planned to fly as a secondary, or “rideshare,” payload on another company’s vehicle.Varda was founded less than a year ago, by a pair with experience at Elon Musk’s SpaceX and Peter Thiel’s Founders Fund, has raised more than $50 million in that time. Rocket Lab and Varda share Khosla Ventures as an investor.While manufacturing in space is not a novel concept, Varda wants to take the process to the next level – to launch and return space-made products more quickly. The start-up plans to manufacture materials that are more lucrative when made in zero-gravity, such as fiber optic cables, pharmaceuticals, or semiconductors.Rocket Lab’s “Photon” satellite platform, on the right, is shown at the company’s factory alongside an upper stage of the Electron rocket.Rocket LabVarda will utilize Rocket Lab’s Photon spacecraft as the backbone of its operation, with the start-up adding its manufacturing module and a heatshield-protected capsule to survive the intense reentry process through the Earth’s atmosphere. Varda’s goal is to bring back about 100 kilograms (or 220 pounds) of material on its early missions.Rocket Lab, which is one of the most active U.S. launch operators with its small Electron rockets, has been steadily expanding its space systems division, with the Photon spacecraft as the central piece. But Beck emphasized that Rocket Lab does not “think of Photon as a product; it’s a suite of products” as each of the spacecraft’s missions are different. The company has won contracts to use Photon for a variety of uses, including NASA missions to the moon and Mars, as well as a private mission to Venus.When Rocket Lab earlier this year announced plans to go public by merging with special acquisition company Vector, it revealed it booked $2 million in space systems revenue last year. The company’s financial forecast expects the space systems division to grow exponentially, aiming to hit $656 million in revenue by 2027.The company is nearing the close of its SPAC merger, with a shareholder meeting set for Aug. 20 to vote on the deal. Beck said Rocket Lab is “very happy with progress” in getting shareholder votes so far.Become a smarter investor with CNBC Pro.Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial today.TVWATCH LIVEWATCH IN THE APPUP NEXT | More

Restaurant Brands International on Tuesday posted strong fourth-quarter results.
It named Chief Operating Officer Joshua Kobza as its new chief executive, effective March 1, succeeding José Cil.
Restaurant Brands has benefited from inflation-driven demand for affordable fast-food options, despite facing headwinds due to rising costs and foreign exchange.

In this photo illustration, a Burger King Whopper hamburger is displayed on April 05, 2022 in San Anselmo, California. A federal lawsuit has been filed and is seeking class-action status alleging that fast food burger chain Burger King is misleading customers with imagery that portrays its food, including the Whopper burger, as being much larger than what is actually being served to customers. 
Justin Sullivan | Getty Images

Restaurant Brands International on Tuesday posted a strong fourth quarter and named Chief Operating Officer Joshua Kobza as its new chief executive, effective March 1, replacing José Cil.
“Over the past several years, the Board of Directors has worked with management to build a thoughtful succession plan for key positions, so this is a natural transition for Josh to lead our next phase of growth,” Chairman Patrick Doyle said in a Tuesday announcement.

Cil will stay on with the company for a year as an advisor to help with the transition.
The leadership change comes as the company works to revive and expand some of its key restaurants. Restaurant Brands houses chains Burger King, Tim Hortons, Popeyes and most recently Firehouse Subs.
Here’s how Restaurant Brands performed in the fourth quarter, compared with what Wall Street anticipated, based on an average of analysts’ estimates compiled by Refinitiv:

Adjusted earnings per share: 72 cents vs. 74 cents
Revenue: $1.69 billion vs. $1.67 billion expected

For the three months ended Dec. 31, the company reported net income of $336 million, or 74 cents per share, up from $262 million, or 57 cents per share, a year earlier.
Quarterly revenue of $1.69 billion marked a year-over-year increase of about 9%.

Restaurant Brands reported overall same-store sales growth of 8% during the fourth quarter and systemwide sales growth of nearly 12%.
Its flagship burger chain, Burger King, saw same-store sales growth of 8.4% during the period. In the U.S. only, sales grew by 5%.
The company has been working to rejuvenate Burger King’s domestic sales and in September announced a $400 million investment plan to boost Burger King advertising campaigns and renovate the chain’s restaurant locations.
At the end of the fourth quarter, the company said it had funded $30 million of that turnaround plan. The company previously said it expects to reap the benefits of the turnaround in 2025.

Joshua Kobza, previously chief financial officer of Restaurant Brands International Inc., speaks during a Senate Permanent Subcommittee on Investigations hearing in Washington, D.C., U.S., on Thursday, July 30, 2015.
Andrew Harrer | Bloomberg | Getty Images

Tim Horton’s same-store sales grew by 9.4% during the period. In Canada alone, same-store sales for the coffee brand rose 11%. The chain has been expanding more internationally, especially eyeing Texas and Florida to target Canadians who travel to warmer climates for the winter.
Popeyes saw same-store sales grow by 3.8%. The chain, which saw a spike in sales with its 2019 debut of its chicken sandwich, has since stabilized and saw just 1.5% growth in the U.S.
Restaurant Brands added Firehouse Subs to its portfolio in 2021. That chain saw a 0.4% same-stores sales increase during the period.
Restaurant Brands has not been immune to industry-wide rising costs and losses in China and Russia. The company said it took less of a hit from Covid-related disruptions during the fourth quarter, though it noted that it had to temporarily close some of its restaurants in markets like China that experienced a resurgence in cases.
It also said that it did not generate any new profits from Russia in 2022 and does not anticipate any in 2023 either. The company last year suspended corporate support for a large Burger King franchise in the country in light of Russia’s invasion of Ukraine.
Covid and the war in Ukraine have created a tough macroenvironment for the company due to foreign exchange headwinds and climbing interest rates. Restaurant Brands said Tuesday that it expects “adverse impact on our business” if it cannot adjust prices to compensate for higher costs.
So far, higher prices domestically have not scared away the company’s consumer base. Fast food companies across the industry have seen boosted demand among budget-conscious customers, beating out fast-casual dining options.
Yum Brands reported a strong fourth quarter last week, mostly propped up by its Taco Bell segment as weak China sales weighed on Pizza Hut and KFC. The company credited U.S. momentum to its chains’ affordable options.
Similarly, McDonald’s profited from changes in consumer spending behavior with a fourth-quarter revenue bump fueled by higher menu prices and increased demand.

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