After quarter upon quarter of sky-high eCommerce growth, seeing digital revenues more than double year over year each quarter, Chipotle Mexican Grill saw its digital growth slow dramatically in the second quarter of 2021. Online sales were just 10.5 percent above the previous year, with the chain retaining around 80 percent of its digital sales as consumers return to life away from home, Chipotle CEO Brian Niccol told analysts. Now, the company is shifting to viewing its digital channel not as an independent driver of revenue but as the gateway to a connected digital-physical experience.
“I’m hoping [customers have] had really positive experiences digitally that will suggest, hey, want to give Chipotle a try in the dining room, and vice versa,” said Niccol. “Hopefully, people that are dining room only people have heard great things about our rewards program, our digital system, and they’ll start giving that a try.”
Niccol also highlighted updates to the company’s digital ordering platforms made since the start of the pandemic, including creating a chatbot to help customers through the process, introducing a ratings system, opening a ghost kitchen, adding more mobile order-ahead drive-thru Chipotlanes, and growing its international digital presence.
As Chipotle Chief Restaurant Officer Scott Boatwright told Karen Webster in a recent interview, as part of PYMNTS’ ConnectedEconomy™ series, these digitally-integrated drive-thrus are a “game changer.”
“We now consider that that digital drive-thru of the future,” Boatwright said. “And I know there are a lot of brands today that are larger that have your traditional drive-thru experience that are entrenched … and I think they’re going to struggle.”
The company’s loyalty program membership grew to 23 million from 21 million the previous quarter, with the program’s members making up about a quarter of all the restaurant’s customers. Chipotle’s two main goals for its digital platforms going forward are, according to Niccol, “expanding access and minimizing friction.”
In addition to its 80 percent digital retention, the restaurant chain has also recovered around 70 percent of its in-restaurant sales. Niccol predicts that the overlap between the digital customer and the in-store customer will “go slowly up from here,” adding that the two “complementary” channels “serve different occasions, different needs,” presenting an opportunity to integrate both into consumers’ routines.
Much of the return of in-store sales comes from the resurgence of lunch business.
“The one thing that is driving some of the bounce back in our dining room business is, we are seeing more business at lunch,” said Niccol, adding later that the lunch occasion not only adds another sales opportunity, but also brings in customers who might not have otherwise ordered from Chipotle. “It’s usually an individual that, frankly, we haven’t seen in a while.”
Overall, the company announced Tuesday (July 20), revenue increased 39 percent year over year to $1.9 billion for the quarter that ended June 30, 2021. According to U.S. Census Bureau data released Friday (July 16), adjusted food services and drinking places (i.e. bar and restaurant) sales reached $70.6 billion in June, up 40 percent from June 2020, suggesting that Chipotle’s revenue growth just about kept pace with the industry as a whole.
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