Dive Brief:

• Chipotle is testing a new restaurant design to better support its $1 billion digital business, according to a press release. The new design will be tested in four restaurants that feature the following formats: an urban storefront, a standalone restaurant with a Chipotlane and an end-cap unit with a Chipotlane in Chicago, Cincinnati and two locations in Phoenix. The design will also be tested in two retrofits in Newport Beach and San Diego.
• The design will include walk-up windows and premium placement for built-in pickup areas. It will also have a more open design and front-row seating to provide direct lines of sight into the kitchen. Bottled beverages will be stored in a customer-facing cooler to be more accessible to diners.
• The chain will monitor each restaurant for transactions, guest feedback and the ability to incorporate future menu innovations, among other metrics before it determines if the design should be scaled across its system. 

Dive Insight:

Now that Chipotle's digital business is worth $1 billion in sales, a lot is on the line to maintain this momentum. It already deployed second makelines, pickup shelves and its drive-thru style Chipotlanes for customers to pick up digital orders without getting out of their cars. These moves were done to improve the overall guest experience for in-store and digital customers as well as delivery drivers, and this latest design furthers this strategy.

While its Chipotlanes is the fastest way for an individual restaurant to boost digital sales, it can't be deployed across its entire system since many of its stores are at in-line locations that don't have the ability to add a drive-thru style window. The company is mostly adding Chipotlanes to newly built stores, with plans to give half of its 150 to 165 new stores in 2020 a Chipotlane. That leaves a bulk of its 2,500-plus locations without the ability to use a tool that analyst BTIG expects will boost restaurant-level margins into the mid-25% range.

Pickup windows will be particularly useful for its restaurants to boost margins, and gives Chipotle a competitive edge, especially for locations in urban areas with heavy foot traffic and more on-the-go customers. Other chains, including Chopt, Starbucks and Shake Shack, are testing takeout-focused locations in New York City, but don't offer pickup windows. Starbucks has said that it is planning a two-year renovation program that could include express door pickups.

For Chipotle, these pickup windows will eliminate the need for customers to enter the store to pick up their to-go orders off of a shelf. It could also speed up service, especially if these windows function the same way as Chipotlanes, where customers collect their orders at a previously specified time. Because of this feature, its drive-thru times are 12 seconds, which could make all the difference for pickup windows as well.