Chipotle Rewards membership doubled in 2020, closing out the year with more than 19.5 million members.
Chipotle also closed out 2020 with impressive digital sales. Digital sales grew 174.1% year over year to $2.8 billion, representing 46.2% of sales. “About half of the digital sales were via delivery, benefiting from expanded partnerships, with the remainder coming from order ahead transactions as guests better understand the value offered by this channel, as well as the convenience of more Chipotlanes,” said CEO Brian Niccol in a Feb. 2 earnings call with analysts.
Lowdown on Loyalty
In one year, the fast casual brand expanded its loyalty program membership to 19.5 million from less than 10 million.
The marketing team, he said, has “done a terrific job” of understanding the frequency of communications, driving engagement and incenting purchase behaviors.
The rewards program, Niccol says, “does have a powerful impact on people's frequency.” From those visits, Chipotle is ”learning more every day. But what we've learned to date, I think is going to have a powerful tailwind for us going forward,” Niccol added.
The fast-casual brand’s digital platform continues to be “a big beneficiary” of guests’ pivot toward off-premise dining. Restaurants nationwide face the realities of doing business during the COVID-19 pandemic, they’re increasingly leaning in to off-prem. With 60% of locations open with reduced dine-in capacity, Chipotle continues to look for ways to enhance its digital ecosystem, Niccol added.
Chipotle announced last week its carside pickup pilot and recently opened Chipotle Digital Kitchen, its first digital-only location in Highland Falls, N.Y. “This new prototype allows us to enter more trade areas that wouldn't support a full-size restaurant and allows for greater flexibility with future locations. It's early days but this location has outperformed our expectations thus far,” Niccol said.
Driving Sales with Digital Pickup
Locations with Chipotlanes, the drive-thru dedicated to digital order pickup, continue to be the company’s top performers. “Performance for these formats continues to be stellar. The digital gap versus non-Chipotlane restaurants remains around 10% driven entirely by higher-margin digital pickup orders,” CFO Jack Hartung explained during the Feb. 2 earnings call.
In 2020 the brand opened 161 new locations including 100 with Chipotlanes.
Barring any COVID-related delays, the brand plans to add more Chipotlanes to new stores in the coming year. “Our goal is to have more than 70% of openings include a Chipotlane in 2021 where we anticipate opening around 200 new restaurants,” Hartung added.
Offsetting the Costs of Delivery
Delivery sales now account for nearly 25% of total sales. To offset the costs, Chipotle has “implemented several delivery menu price differentials … around 13%,” explained Hartung. “We have seen modest resistance thus far and we'll continue to monitor and adjust pricing as appropriate at the market level or at the restaurant level.”
Niccol remains optimistic about the brands future. “The digital system is strong it's growing and we have plans to continue to grow it. Our in-store business, when it can come back, I know people will want to come back because the culinary and the food is second to none. And you just put those two things together with the ability to continue to build more restaurants hire more people and grow our people accordingly I think the future is very bright,” he said. “And I'm optimistic that COVID is hopefully more in the rearview mirror going forward.“