Woodkirk Stone
As Chipotle Mexican Grill continues to increase digital sales while restoring in-store traffic, one question remains: what is the right mix for the chain in a post-pandemic world?
The Newport Beach, Calif.-Based chain has recouped about 80% of its in-store sales while retaining about 80% of the digital business acquired during the pandemic, when many restaurants were temporarily closed for dinner.
Brian Niccol, CEO of Chipotle, has long referred to the brand’s digital and in-store channels as two separate businesses, served by the central kitchen. During the third quarter call with Wall Street analysts last week, Niccol said frontline in restaurants accounted for almost 60% of sales, or $ 1.1 billion in the quarter ended September. . “It’s big and it’s growing,†he said.
The digital side, meanwhile, accounted for around 43% of sales, or $ 840 million, reflecting 9% year-over-year growth. But Niccol reiterated that it’s a more profitable transaction when customers order ahead and pick up their meal or do so via a Chipotlane drive-thru.
Scott Boatwright, restaurant manager at Chipotle, left, said in an interview Thursday that finding the right balance between digital and in-store sales was a lingering question internally.
“I don’t know what the right balance is,†he said. “We saw a persistence that we could handle regardless of the trends, which I was very excited about as an organization and a company. I think we’re probably going to settle around that 40% figure in the short term, plus or minus a few basis points. “
With the industry-wide labor shortage sometimes hampering staffing, Niccol touted Chipotle’s flexibility in assigning labor as a strength. If necessary, restaurants can divert staff from digital manufacturing lines to keep the front lines open for in-store orders. It’s actually something Chipotle did even before the pandemic, but Niccol said it’s even more relevant now.
This flexibility in the distribution of the workforce is not without challenges, however. Chipotle workers in New York on Thursday staged job cuts saying their hours had been cut and workers were overworked. Earlier this year, the channel would have been the subject of a dispute on fair planning practices.
But Boatwright said the ability to reduce digital order volume – which happens multiple times a week across the country – helps restaurants manage the workload with the available team to stay focused on the in-store experience. .
“The last thing we want to do is create a bad experience for our team member or our guest,†he said.
Chipotle aims to roughly double its size in North America, from almost 3,000 units currently to around 6,000. “There is a lot of white space across the United States today,” he said. said Boatwright.
And the push to digital sales is built into this growth plan. The chain is aggressively building new restaurants as Chipotlane drive-thru units, which have seen sales around 10% higher than traditional units. Chipotlane users order in advance through the channel’s website or app. In the third quarter, 36 of the chain’s 41 new restaurants were Chipotlane units.
Last year, Chipotle also began testing a digital-only format in Highland Falls, NY, and Boatwright said the company was very happy with the operation of the restaurant and the economy at the unit level.
Small digital-only units could help fill market gaps where they can’t add another brick and mortar, he said.
“If we’re going to build a new restaurant, we’re going to build a Chipotlane first. We’ll fall back on the traditional Chipotles, the tips, if you will. And we’ll take advantage of these digital restaurants when it makes sense to do so in smaller footprints where we are compromised on space and / or use them as C restaurants to offload loads to two higher volume restaurants where we are. can’t build another free standing restaurant nearby, â€he said. “So we’ll be using this more as a site menu when we think about development in North America. “
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