It was big and buzzy news late last year when Chipotle eclipsed $1 billion in digital sales—a milestone it hastily chased as consumer behavior shifted toward convenience, from expanded delivery to awareness to “Chipotlane” order-ahead lanes, in-store pickup shelves, and a second make-line dedicated to off-premises execution.
Among the countless ways COVID-19 has been characterized in the past seven-plus months, a reality for many restaurants, especially quick-serves, is that it didn’t invent new trends so much as it lit a fire under previously accelerating ones. None more so than digital.
And now, less than a year later, Chipotle’s billion-dollar mark proved just a precursor. CEO Brian Niccol said Wednesday the brand’s digital sales are on pace to not just reach $2.5 billion in 2020, but exceed the figure. For perspective, Chipotle today is pushing digital average-unit volumes of “well over $1 million.” It was just a few hundred thousand a few years ago. This means Chipotle’s second-make lines alone—with no in-store element—are generating AUVs that would have ranked 36th among America’s top-50 highest grossing fast-food brands by sales per unit in 2019, ahead of Dunkin’ at $968,000. Also, 50th for full-service chains, more than $200,000 clear of Waffle House.
But where the COVID effect really surfaces is in the split. Chipotle’s AUVs in Q3 were roughly $2.2 million overall.
Digital sales in the period, which ended September 30, leapt 202 percent, year-over-year, to $776 million, or 49 percent of sales. This slide a bit as dine-in returned. Last quarter, it rose 216.3 percent to nearly 61 percent of Chipotle’s business, accounting for $829.3 million—the company’s highest quarterly level in brand history, by miles.
Yet if we go back further, Chipotle’s digital take was $372 million in Q1 (a company record at the time). That, though, was more than quadruple Chipotle’s performance from three years ago. In Q2 2019, it was $262 million. The previous Q4, digital mixed only 12.9 percent of sales.
In some ways, Q3’s result is more impressive than Q2’s simply because the lockdown landscape isn’t as severe. Chipotle has just 10 restaurants closed today and roughly 85 percent offering limited in-restaurant and/or patio dining. The remaining are off-premises only. Chipotle had about triple the temporary closures in July, mostly in malls and shopping centers. Lobbies began reopening in mid-May.
Another difference is Chipotle, even with the Q2 digital rocket, saw same-store sales decline 9.8 percent as total revenue fell 4.8 percent to $1.36 billion, the company’s first decline in at least 14 quarters.
Performance began to turn positive in June at 2 percent. Chipotle Wednesday, however, announced its top-line surged back into the black in Q3 with comparable sales gains of 8.3 percent versus year-ago levels. The brand’s two-year comp stack is 20.2 percent, similar to the 20.4 percent pre-COVID level it delivered in Q4 2019.
Revenue upped 14.1 percent to $1.6 billion. Chipotle also opened 44 new restaurants and permanently closed three—continuing a year-long acceleration from 19 in Q1 to 37 this past quarter.
Since sales troughed in late March, Chipotle has retained 80–85 percent of digital sales gains while recovering 50–55 percent in-store sales.
During Q3, about half of Chipotle’s digital business came via delivery. The difference flowed through order ahead and pickup.
As of October, Niccol shared, Chipotle’s digital mix remained in the “high 40s.”
“Chipotle has transformed itself over the past two years to a real food and people company powered by technology,” he said on a conference call.
THE COVID ROAD FOR CHIPOTLE SO FAR:
Chipotle Eyes Growth in the Wake of COVID-19
With Diversity, Chipotle Puts Words Into Action
Chipotle Launches Group Ordering on App with TikTok Challenge
Chipotle Unveils First Digital Fundraising Program to Support Students
Why COVID Could Kickstart Chipotle’s Road to 5,000 Restaurants (Q2 recap)
Mary Winston and Gregg Engles Added to Board of Directors
Chipotle Introduces New Organic Drinks Lineup
Chipotle to Hire 10,000 People as Drive-Thru Growth Accelerates
Cilantro-Lime Cauliflower Rice Starts Testing
Introducing a Virtual Farmers’ Market
Partnership with Grubhub Will Expand Delivery
CEO says Chipotle has ‘Home Run’ Potential After COVID-19
How COVID-19 Could Change Chipotle as We Know It (Q1 Recap)
Chipotle to Give Nearly $6.5 Million in Bonuses to Employees
One example he provided was Chipotle’s rewards program, which has enjoyed a COVID ride of its own as customers seek digital channels they might have ignored before. The ability to order ahead and pay, and pickup with zero contact, continues to gain adoption amid a climate where many consumers are still debating whether leaving the house (or dining in restaurants) is a personal safety risk. Today, Chipotle has 17 million enrolled members. From April to July the base bumped some 3.5 million. At that point, there were 15 million users, a pace of a million adds per month from its launch 15 months prior. And more than 70 percent of digital orders were coming from loyalty guests.
The 17 million pool is larger than typical viewership for a Monday Night Football broadcast. Niccol said this gives Chipotle “a content distribution and engagement network that we can use to elevate engagement and awareness of brand initiatives.”
Additionally, a lot of these members, he added, are new to Chipotle. They’re not simply dine-in guests who switched to off-premises in light of COVID.
“… what really excites us is that we are in the early stages of using this valuable tool to understand consumer behavior that will allow us to enhance their journeys and ultimately drive higher sales,” Niccol says. “We can also utilize these learnings to reengage members if their visits decline, which should efficiently sustain the stickiness of our digital platform.”
If (hopefully when) COVID clears, Niccol expects loyalty to “be a key enabler” of Chipotle’s digital flywheel as it optimizes the use of the resulting dataset. It’s the type of language Starbucks has used for years off its trailblazing platform, which reported 18.8 million 90-day active members this past quarter. It was 19.4 million pre-pandemic. Starbucks Rewards accounted for 44 percent of its U.S. tender in Q2.
All of this in mind, Chipotle now has two large and growing business to manage. And retention and employee engagement is essential to both. “A strong culture is a critical part of running successful restaurants,” Niccol said.
Do you need Digital Marketing or Digital Transformation help in your company? Know how we can help you or your company succeed in the Digital Era. Access our website, know more about our services, and get in touch! We are an amazing Digital Marketing Agency, with high technical skills to make you thrive! JSA Digital
Content Originally Published by Google.
source https://blog.jsa.digital/index.php/2020/10/24/chipotles-digital-business-fast-approaches-2-5-billion/
No comments:
Post a Comment