The fact order-ahead daily sales doubled since COVID-19 provided Chipotle more fuel for its drive-thru shift.
The company said its delaying nonessential reinvestments, including deferring all remodels that don’t involve a digital make-line or the addition of a Chipotlane. It’s also pulling forward those projects that still need the first feature.
In Q1, Chipotle opened 19 restaurants, with 11 featuring a Chipotlane. During COVID-19, restaurants with a drive-thru lane have appreciated digital mix of roughly 80 percent. Also, the mix of higher-margin order ahead and pickup transactions more than doubled for those units compared to pre-COVID-19. And while Chipotlane opening sales were outpacing traditional units 5–10 percent before the crisis, they’re now higher by over 30 percent. A recent opening pushed day one sales of $15,000—one of the highest yet, the company said.
Moving forward, less competition for new sites will likely lead to an even greater proportion of Chipotlane restaurants in the company’s pipeline, Hartung said. It could represent as much as 70 percent of the brand’s growth, up from previous projections of 55 percent. "I do think for this year, you'll see the percentage of Chipotlanes inch up," he said. "And then I think for next year, I think you'll see a stair step. ... certainly higher than 60 percent and maybe north of 70 percent as well. But we'll see. So far, the reaction from the landlords has been good. So we're very, very optimistic."
Niccol added Chipotle won’t shy away from sites and the ability to pick spots best for its digital growth.
Hartung said it’s probable rents will relax a bit out of COVID-19 as restaurants batten down their development plans. One thing that excites Chipotle: landlords that might have been resistant to add a Chipotlane in the past, perhaps thanks to having to redo the circulation around the property, might change their tune. “While they might have resisted that a bit in the past, we're not seeing much resistance of that anymore,” Hartung said.
“… I have to tell you, if a developer is cash poor and they're looking to sell a site and if the price is right, we'll certainly be there, and we're willing to definitely buy that land, so we can lock in our occupancy costs forever,” he added.
What Chipotle is doing, and how much money is going out the door
In recent years, Chipotle has strengthened many of its food-safety initiatives in response to past setbacks. The company started conducting wellness checks before every shift and has trained nurses available to evaluate any employee who may feel ill in order to determine whether they should be excluded from work with full pay. It also installed advanced technology air purification systems to reduce the risk of viruses, supplied Purell sanitizer for employees and guests, mandated handwashing between tasks and at least every hour, required gloves be worn for all tasks, enhanced food preparation and food-handling practices, improved internal training and education, engaged a third-party consultant to perform regular inspections of all restaurants, and lastly, created an independent food safety advisory council compromised of category experts.
And that was all pre-COVID-19.
As coronavirus spread, Chipotle formed a cross-functional task force that holds daily calls, Niccol said. The chain implemented increased sanitation of high-touch, high-traffic areas, provided masks for employees, and added tamper-evident packaging seals for off-premises orders.