1. A digital transformation
One of the most significant changes Niccol brought to Chipotle was a stronger commitment to the digital experience. That’s included digital-order pick-up shelves and third-party delivery powered through the company’s app and website, among other digital evolutions.
“Reducing friction and providing more convenient access for our guests has been critical to increasing our digital system penetration over the past couple of years,” Niccol said on the call.
The results have been staggering. Digital sales were up 88 percent, year-over-year, in Q3 and, at $257 million, account for 18.3 percent of company sales. Niccol said Chipotle is “knocking on the door of digital becoming a $1 billion business.”
Facilitating that growth is the second make line in Chipotle restaurants dedicated to digital orders. Niccol said it has now been installed at all relevant locations.
“Now that we have the digital make lines installed, we are focused on ensuring that execution for this large and growing business matched that of the traditional frontline,” he said.
As with most other restaurant companies, third-party delivery has provided Chipotle with another access point for customers hungry for its burritos, bowls, tacos, salads, and quesadillas. But while many have fretted that the delivery services simply spread existing business around to other channels—while taking a large chunk off the top of each order, to boot—Niccol said that’s not the case at Chipotle.
“Delivery remained a key driver of our digital growth given enhanced capabilities on our app and website, as well as our expanded availability for more than 97 percent of our restaurants,” he said. “Importantly, digital remains highly incremental, and we continue to see residual lift in delivery sales that last beyond any promotion.”
2. A massively popular loyalty program
In March, Chipotle rolled out its new Chipotle Rewards loyalty program nationally. Guests earn 10 points for every $1 spent in the restaurant, online, or in the app, with 1,250 points resulting in a free entrée.
Niccol reported on the call that the program now has 7 million enrolled members, including 2 million new members in the last quarter. He added that Chipotle has “only scratched the surface on database marketing” through the rewards platform.
Indeed, the company’s strategy with its loyalty program is not only to drive sales through the channel, but also to engage customers beyond their traditional Chipotle experiences.