As digital ordering shows no signs of slowing down, Chipotle continues to transform the look and feel of its brick-and-mortar stores.
For the third quarter, digital sales grew 88% year-over-year to $257 million and represented 18.3% of sales. Delivery remains a key driver of Chipotle’s digital growth – and that has been boosted by enhanced capabilities on its app, website and expanded availability from more than 97% of its locations, explained CEO Brian Niccol in a Q3 earnings call with analysts.
Chipotle has added digital make lines in all relevant restaurants, making “the system more efficient for our guests, team members and delivery partners, while driving more sales and loyalty for Chipotle,” said Niccol. “Now that we have the digital make lines installed, we are focused on ensuring that execution for this large and growing business matched that of the traditional front line.”
To date there are about 20 Chipotlanes. While mum about the exact sales lift per location for stores that have them, Chipotle is accelerating the addition of its drive-thru for mobile order pickup to its new locations.
With Chipotlanes, there’s “less friction, meaning it’s easier to order, it’s easy to stop-in and pick up without even getting out of your car,” explained Niccol. “That tends to cause our customer to want to (visit) even more often. So our optimism, even though it’s very early is very strong and the economics, with even a modest increase in sales at that kind of an incremental investment ( Editor’s note: about $75,000) is going to be very attractive.”
There are no plans to convert Chipotlanes to a traditional drive-thru format. “Frankly, I think this is the future of how people will want to interact with restaurant companies because this is arguably faster than any other way possible to get your food,” said Niccol. “So we don't see any reason to make that pivot going forward.”
Chipotle Rewards members can expect more targeted marketing in 2020. Since its March launch, Chipotle’s loyalty program has topped 7 million enrolled members and that number is expected to grow. Niccol said the fast-casual brand has “only scratched the surface on database marketing … and going forward, we’ll double down on our ability to leverage this data to incent behaviors. We expect this lever to become a bigger driver over time as we gain more experience gathering customer insight, while continuing to expand our digital platform.”
Niccol lavished praise on its team members and its operations. “You don't deliver 7.5% transaction growth and an 11% comp unless you've got an organization that is all rolling together, and I think the culture is tremendously strong, both in the support centers and in the restaurants,” said Niccol. “And I'm also really delighted about the unlock that I think Chipotlanes is going to present for us from our new unit opportunities going forward.”