Life in the Chipotlane: The Chain Is Betting Big on Drive Thrus for Digital Orders
“I think this is the future of how people will want to interact with restaurant companies,” CEO Brian Niccol said.
Good news if you love Chipotle and hate getting out of your car: the company has big plans for its new “Chipotlanes,” digital-only drive-thru lanes currently operating at 20 locations. They’re the latest manifestation of Chipotle CEO Brian Niccol’s tech-forward plan to win back customers after years of foodborne-illness cases tarnished the brand’s reputation.
“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,” he said on Tuesday.
The company released its third quarter earnings this week, beating analysts’ estimates and posting another quarter of growth. Digital sales rose 88 percent year over year, representing close to a fifth of all sales.
Same-store sales growth increased 11 percent in the same period, an indication that business is good, but digital business is great. Even better, digital sales tend to be incremental, meaning they’re new orders the restaurant wouldn’t have gotten inside the store.
“We’re knocking on the door of digital becoming $1 billion business,” Niccol said. (This quarter alone it was a $257 million business.)
Since Niccol’s appointment as CEO in March 2018, a robust tech strategy has led to big changes across the business. Chipotle installed second make lines at its restaurants, behind-the-scenes versions of the customer-facing meal assembly line built to handle the influx of online orders. It also added pickup shelves—think of them as the in-store version of the Chipotlane. Last year, the company partnered with DoorDash to deliver orders placed via the Chipotle app.
Newer restaurants optimized for urban markets and a digitally-connected clientele have built big businesses on these same practices. Take Sweetgreen, for example, the salad chain with a billion dollar-plus valuation to show for its efforts.
Chipotle has a current market value of about $22 billion (that’s roughly 20 Sweetgreens) and seems to be winning back supporters A new digital loyalty program introduced in March has grown quickly to include 7 million members, almost certainly a side effect of a robust mobile app and the brand’s tech embrace. Not bad for a restaurant chain that’s pushing 30.
The fast casual pioneer did miss on one metric this quarter, opening fewer new stores than planned. The CEO quickly invoked the company’s digital strategy as a defense for the miss: the drive-thrus are working so well that Chipotle has slowed down new construction so more new stores can have them. He said that digital business at new Chipotlane-ready locations is “roughly 50 percent bigger.” Expect 60 drive-thru-ready locations by the end of the year to capitalize on our needs for convenience and to avoid talking to a human at all costs.