Not unlike squirrels storing nuts for winter, some companies saw the resilience of digital channels long before the cold weather arrived earlier this year, carrying COVID-19 and assorted ills with it. Take restaurant success story Chipotle Mexican Grill, the fast-casual giant whose Q2 financials show the line of demarcation between an analog past and a very definite digital-first future.
The chain’s digital revenue rose 216 percent and accounted for 60.7 percent of total revenue during the quarter. Chipotle also reported that order-ahead sales have risen 140 percent since the pandemic began, while home or office delivery spiked 125 percent.”
Speaking with PYMNTS recently, Chipotle Chief Restaurant Officer Scott Boatwright said the chain’s app and related digital experiences not only saved the day when on-premise dining was banned, but are also delivering an entirely new customer to the brand.
“I would say the majority [of] the folks that came in through digital during COVID were brand-new users to our brand,” Boatwright said. “We’ve recognized that … the digital consumer remains digital and the in-restaurant consumer remains in-restaurant. There’s a little overlap — but surprisingly, they’re two very different customers.”
He noted that Chipotle added customization features to its popular ordering app even as the digital shift was occurring in Q2, improving individual customer experiences by giving people more choice.
“Because the new digital consumer has really not experienced our traditional [on-premise dining] experience, we enhanced our app this summer to increase customization,” Boatwright said. “If you want a little extra rice or a little less of something, we now offer that kind of customization [and] restaurant experience through the digital platform. I think that’s paying huge dividends.”
Loyalty And Optimism
Boatwright said Chipotle’s new digital-first customers also appear keen on the chain’s Chipotle Rewards loyalty program. Introduced last year, the program has been experiencing healthy participation in its first year, the program already has 15 million users, and Boatwright said the chain has plans to make loyalty even tastier as time goes on.
“We’re still in the very early innings of our program,” he said, adding that having 15 million sign-ups in one year represents “extraordinary growth. … I’m sure there’ll be additional modifications in the future, but only to make it more robust and more rewarding for our most loyal users.”
Meanwhile, Chipotle’s recently announced plans to hire 10,000 workers during the worst U.S. downturn since the Great Depression is another indication of the chain’s bullish outlook.
Saying that Chipotle is “very fortunate to be in a position where our brand is growing both domestically as well as our other properties in Canada,” Boatwright pointed out that “we opened 35 new restaurants in Q2 alone. In the heart of the pandemic, we continued to keep our foot on the pedal and keep development moving because we’re betting on the future.”
But he admitted that not every company is in that position, especially in the rough restaurant sector. “There are obviously going to be winners and losers in any industry through this pandemic,” Boatwright said. “It is a time where if you’re able to invest in your business, in your employees or team members, invest in your consumer, we’ll come out of this stronger as an industry. We’ll have safer practices as an industry.”
He believes the industry will survive because “at the end of the day, human beings want to congregate. They want to gather, and there’s nothing like a great meal to bring people together, whether it’s a birthday or anniversary or [other] life events. I don’t know that we ever want to lose that.”
New Concepts In-Store Design — And Maybe In Delivery, Too
Recalling that before mobile order-ahead, many Chipotle locations would have lines out the door and down the street, Boatwright said he saw a scenario where “we would lose a guest who was unfamiliar with our brand or our offering — or more importantly, unfamiliar with the speed at which we can deliver the experience.”
He said that led to digital innovation in 2018 and 2019 that sustained Chipotle through April 2020’s lows to emerge as a somewhat-changed company. Boatwright said a wave of new digital-first mobile order-ahead customers would change Chipotle over time as the company increasing caters to preferences with in-app offers and rewards.
He added that the transformation of Chipotle’s network of physical locations is ongoing, with the touchless order-ahead Chipotlane drive-thru locations now numbering 100 and counting. But Boatwright said the company was “very cautious not to skew towards a typical fast-food drive-thru. We didn’t think that was authentic and true to who we are as a brand.”
Still, he said the majority of Chipotle’s development pipeline would consist of Chipotlane restaurants “wherever possible. It’s probably the fastest experience in the space today” — and the most profitable.
Boatwright added that the chain is also studying and refining other concepts as well. For example, the industry is speculating that Chipotle and other large players might take delivery in-house, bypassing mobile order aggregators.
“Nothing’s out of the realm of [possibility],” Boatwright said. He said that as of now, “where we sit with our aggregators, we’re very happy with our relationships.”
But he added that “aggregators have to make money. They’ve got to find a way to … prove out their economic model and hit their numbers. We understand and respect that, but we also have to continue to create value for our consumers. And as long as we can continue to create value for the guest in the digital channel, we’ll continue to use our partners.”
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