Building upon what Chairman and CEO Brian Niccol described as “a strong foundation,” Chipotle Mexican Grill is zeroing in on two areas for improvement.
During Q3 ‘23, Chipotle Mexican Grill’s store comps increased 5% while total revenue increased 11.3% to reach $2.5 billion. Digital orders represented 37% of sales.
In an Q3 '23 earnings call with analysts on October 27, Niccol and other executives discussed the quarter’s results. Niccol also shared the “two key initiatives … that we believe will drive further improvement.”
1. Throttling Digital Orders
The first is adjusting the cadence of digital orders to better balance the deployment of labor. This eliminates the need to pull a crew member from the front make line to help the digital make line during peak periods, Niccol explained.
2. A Renewed Emphasis on Throughput Training
The second is a “renewed focus on throughput training.” Chipotle locations will be resurrecting a coaching tool that was in place prior to the pandemic. “Feedback from our restaurant teams on these two initiatives has been very positive, and we're seeing that restaurants that have the right cadence of orders on the digital make line and that are executing the four pillars of throughput are seeing an improvement of four to five entrees in their peak 15-minute period,” he added.
Smarter, accurate pickup times continue to be a focus for order ahead and carryout orders. Chipotle has implemented smarter pickup times, adjusting the number of orders in a 10-minute window as well as the buffer, “so that our crew can execute those digital orders with excellence without having to impact giving the frontline a great experience.”
The early results are promising. “We're more on time, more accurate and we're seeing gains on the throughput side of things on the frontline. And we're not seeing a step back in any conversion rates in that digital business as well. So it's full steam ahead and we got to execute the operating platform," he said.
Niccol said the delivery business remains “pretty stable.”
Niccol also gave a update on Chipotle's testing an automated digital makeline in collaboration with Hyphen and also Autocado which cuts, cores and scoops avocados. Both are at the brand's Cultivate Center to test and learn on. "While we still have some iterations to make the Hyphen and Autocado before they are ready to be tested in a restaurant, I am excited about the progress the team is making and we will continue to provide updates on the path through the stage gate process," Niccol said.
When asked about loyalty, Niccol said they’re “... focused on taking all the analytics and the insights that we are seeing and figuring out how we commercialize those learnings in a way that's very personalized for the individual.” For example, suggestive selling to a customer one of their often-purchased items when it is missing from their digital order.
It remains a work in progress, he said.
Also during Q3, the fast-casual brand opened 62 new restaurants with 54 locations including a Chipotlane drive-thru.