Niccol believes the overlap will go up as people return, but that the end-result is circular. “I'm hoping they've had really positive experiences digitally that will suggest, hey, [I] want to give Chipotle a try in the dining room and vice versa,” he said.
“One thing we continue to learn is these occasions are unique,” Niccol added of Chipotle’s digital split itself. “If you want a delivery occasion, you usually don't trade it off with an order-ahead occasion. But the ability to have access to both is really powerful.”
On the same token, dining-room-only guests will be greeted with messaging on rewards, delivery, digital ordering, and hopefully, Niccol said, decide to give it a go. It’s a world where the two businesses serve different needs, and prove incremental and complementary for Chipotle.
The brand’s quesadilla is a good example. Introduced as a permanent digital-exclusive offering in March, it’s appearing in about 10 percent of Chipotle’s transactions. And it’s also luring in new guests, Niccol said.
It’s also demonstrated how Chipotle can run innovation out of its digital business without impacting in-store operations. “And I think we are also going to be able to run innovation on our dining-room business without impacting our digital business,” Niccol said.
This is unlocked through the fact Chipotle essentially operates two businesses out of every restaurant, with a second make-line that alone boasted AUVs north of $1 million last year.
Chipotle has kept innovating with digital, too, introducing a concierge chatbot, “Pepper” to its app, which can answer common guest questions and free customer care teams up to help with more complicated issues. Chipotle also gave guests the ability to easily rate their order in the app and online, “providing our restaurant operations teams with actionable insights on how to maintain and improve the digital guest experience.”
Chipotle’s rewards program ballooned to 23 million members in Q2 from fewer than 10 million headed into 2020. The company launched the program’s biggest update since its 2019 inception last month. “Rewards Exchange” allows users to unlock more items, more often. Previously, points only went toward free entrées. Members can now pick from 15 different options, including “Chipotle Goods.” Diners can also redeem points to support non-profit partners of the brand, like The Farmlink Project.
Niccol said the update should improve engagement and frequency. And more enhancements are coming by year’s end. “While the loyalty program is used to help drive frequency, our marketing efforts are primarily designed to bring more people to the brand,” he said. “The combination of reach-based media and a successful frequency driven loyalty program make a great one-two punch that both brings in new users and increases transactions with our existing customers.”
Additionally, Chipotle’s brisket was validated by the chain’s “stage-gate process,” meaning it’s going to enter the seasonal rotation. Expect to see a cadence of on average about two to three menu innovations per year.
All of Q2’s metrics and recent momentum has Chipotle executives confident in a long-term target of 6,000 North America units. “We have the cash to do it. And we also know there is no better investment with our cash than to build more Chipotles. So, that's always going to be the first priority,” Niccol said.