Chipotle spurs 5x surge in loyalty app downloads, analyst says

Brief:

Chipotle Mexican Grill boosted downloads of its mobile app nearly fivefold with last month's nationwide rollout of a loyalty program, Jeffrey Bernstein, a restaurant industry analyst at Barclays Capital, said in a research note cited by CNBC. Within a week of the launch, Chipotle Rewards reportedly registered its one-millionth member, who won a year of free food.
App downloads jumped 480% from the prior 12-month average to 14,400 a day, while daily active users surged 273% to 25,700, per Barclays' analysis of data from SimilarWeb. Although the data reflect activity for Android users, Barclays estimated that trends for Apple users are similar.
Chipotle last month promoted the national rollout of the loyalty program by teaming with digital wallet company Venmo to give away money to members. The website created for launch hit about 80,000 visits on its first day, Barclays said.

Insight:

Chipotle's loyalty program shows early indications of how mobile technology can help to boost store visits and orders among key customers, likely helping to drive future sales growth and longer-term brand loyalty. Adoption of the mobile app gives the burrito chain more marketing power for special promotions. To celebrate National Burrito Day on April 4, for example, the chain is offering free delivery on all orders of $10 or more through the Chipotle app and website or through food-delivery app DoorDash.

Deloitte Digital, which consulted Chipotle on the development of its mobile app two years ago, said diners spend 13% more at fast-casual chains like Chipotle while ordering online. Chipotle saw a 50% gain in mobile orders and 33% jump in digital orders after redesigning its mobile app in 2017, Deloitte said. Chipotle last year tested the loyalty program before last month's nationwide expansion. Customers can earn 10 points for every dollar spent at its restaurants. The rewards program offers a free entrée for 1,250 points, and the chain plans to run special events like bonus points days to help customers win free food faster and drive sales.

Chipotle is among the brands adding loyalty programs to their apps to boost customer visits. Bakery chain Paris Baguette last month released a mobile app that lets customers place orders and earn rewards for each purchase. Starbucks has made its mobile app a central part of its successful loyalty program, along with ordering and payments. Pizza Hut also updated its Hut Rewards to let members for the first time earn points for in-store purchases as the pizza chain tries to drive foot traffic into restaurants.

Mobile optimization is a key part of engaging customers with a loyalty program, according to researcher Gartner L2. Brands also have recognized the need to diversify their rewards programs, with 61% of brands offering experiential rewards and monetary benefits in 2018, compared with 47% the year before, Gartner L2 found. Experiential rewards can include birthday perks, invitations to exclusive events, free services and early access to products and sales.