Dive Brief:
- Chipotle’s digital sales are expected to reach $3.5 billion by the end of the year, CEO Brian Niccol said Tuesday during the company’s second quarter earnings call. In 2021, digital sales were worth $3.4 billion.
- In-restaurant sales increased 35.9% while digital sales represented 39% of sales during the second quarter, according to the chain’s earnings release.
- Digital sales represent a smaller percentage of sales compared to the year-ago quarter, when they made up 48.5% of sales, as more people return to in-store dining. Delivery service revenue also fell to $20.5 million compared to $23.2 million quarter-over-quarter.
Dive Insight:
Though more customers are eating in Chipotle’s restaurants, consumers have a weaker attachment to this channel compared to digital ordering, CFO Jack Hartung said during the call.
Order mix is shifting, too. While overall transactions were up between 3.5% and 4%, group orders, which tend to be popular via digital channels, shrank in size by about 4.5%.
As in-restaurant and digital sales grow, Chipotle is looking to speed up order fulfillment, especially for digital customers, Niccol said. The chain launched an operations initiative that will focus on retraining crew members on service fundamentals, he said. Because many current employees joined Chipotle within the last two years, many haven’t experienced the front line and what it means to grow in-restaurant sales alongside digital sales, he said.
“These fundamentals include having great culinary prepared and ready to serve, open to close in a food-safe environment; ensuring that restaurants are staffed and appropriately deployed across both the digital make-line and front make-line; improving order accuracy and timing for the digital business; and increasing throughput in hospitality for the in-store business,” Niccol said.
The company also rolled out a new labor management tool that “helps put people in the right place at the right time,” which, along with the new training, will help boost productivity, he said.
Chipotle’s rewards program has also grown to over 29 million members, and the chain is mining data every day to gain insights on how to influence behavior and boost return visits, Niccol said. The chain is also working to create more personalization opportunities for customers, and is evaluating what diner incentives yield the best return on investment, he said.
