One of the first times Chipotle spoke openly about the so-labeled “Chipotlane” was in November 2019, when former CEO Brian Niccol addressed CNBC’s Evolve Summit in Los Angeles. He claimed it was taking the brand “all of 12 seconds” to get food to customers through the format.
Beyond that being an eye-widening stat in of itself, it revealed a juncture in the brand’s history, and perhaps the larger category as a whole. The drive-thru was long viewed a fast-food staple that’s presence signaled a trade-off between speed and quality. Few chains drew that proverbial line in the asphalt starker than Chipotle and its assembly line approach.
Technology, however, had started to gray that perception, whether in food or retail. In particular, the rise of mobile ordering as an entry point to access and instant fulfillment opened the whitespace. For Chipotle, it was an opportunity that had to fit its equity. So there couldn’t be a menuboard (too much customization and potential friction). The brand was already grappling with throughput and digital orders. As VP of operations services Haris Khan said at the time, “Could you imagine a guest at a speaker box building their entrees by calling out multiple ingredients off a menuboard? It would slow throughput, negatively impact operating margins, and be a terrible guest experience.”
The answer came in restricting Chipotlanes to digital orders and creating a drive-thru pickup lane where guests who ordered in advance could pull up and get their food from a quick handoff. Chipotle claims it was the first restaurant to unveil such a digital order drive-thru pickup lane—a point that triggered a flood, from sweetgreen to Noodles & Company to Pizza Hut to McDonald’s.
To say the model took off at Chipotle, though, wouldn’t be doing it justice. The company began testing the earlier generation format in late 2018 and had a handful in 2019 when Niccol, now at Starbucks, made his comment. At that stage, the brand was dropping them in proven, established markets to see how results compared to high-performers. By summer 2021, there were 250. It opened 56 restaurants in Q2 of that year and 45 included a Chipotlane.
Those openings debuted with sales 20 percent higher than traditional formats and operated with 200 basis-points higher restaurant-level margin. The incremental profit comfortably offset the $75,000–$100,000 cost of a Chipotlane and yielded cash-on-cash returns of at least 500 basis points above standard units, analysts suggested. Additionally, they were driving about a 15 percent higher overall digital sales mix—a critical margin point when you considered the ability to push more carryout orders over third-party delivery.
And those KPIs set off a movement. Chipotle earmarked 80 percent of go-forward development to Chipotlanes and had 500 scattered across North America by November 2022.
A LOOK BACK: Chipotle Wants to be Clear: It Isn’t Opening Drive-Thrus
On Wednesday, Chipotle announced its 1,000th, which is set to open Thursday in Kansas City metro (14833 West 151st Street in Olathe, Kansas). Of the company’s more than 3,600 total restaurants, nearly 30 percent feature now feature a Chipotlane.
And it all happened in roughly five years.
“Chipotlanes are a critical piece of our long-term growth goal of reaching 7,000 restaurants in North America,” Chris Brandt, chief brand officer, said in a statement. “This restaurant format is the fastest way for fans to get Chipotle and has proven to increase sales, margins, and returns.”
Just on its own, Chipotlanes (according to year-end 2023 QSR 50 data) would represent the 34th largest quick-service brand in America, right ahead of Whataburger (997 units).
It’s only going to widen as well as Chipotle plans to accelerate new unit growth in the 8–10 percent range per year en route to its 7,000 target. The majority of those will include a Chipotlane. Near-term, Chipotle expects to open between 315–345 new restaurants next year—at least 80 percent will tout the feature.
In Q3—the most recent report—Chipotle opened 86 company stores, of which 73 had a Chipotlane. The 2024 guidance calls for 285–315 new units (also 80 percent Chipotlanes).
As for how the model has evolved performance wise, Chipotle Wednesday said it takes guests, on average, less than 30 seconds to complete the Chipotlane process. While it’s difficult to juxtapose given the difference in formats (speaker box or outside order taker versus pickup window), the average total time of quick-service brands in this year’s QSR Drive-Thru Report was 329.05 seconds.
Chipotle also noted Wednesday its growth is going to require a bump in labor. It’s targeted this reality through a number of initiatives, including laying out a career progression to Restaurateur, the company’s highest GM position, in as little as three and a half years, with a total potential compensation package of about $100,000. Last year, Chipotle had 24,000 internal promotions including 90 percent of its restaurant management roles and 87 percent of field leader positions. Chipotle offers eligible workers industry-leading benefits such as debt-free degrees, tuition reimbursement up to $5,250 per year, access to mental health care, financial planning tools, and the opportunity for quarterly bonuses for all employees, including hourly crew members, up to a month’s worth of pay per year.
MORE: Chipotle’s Hourly Turnover Dropped 10 Percent in 2023
The company will also go forward under new leadership. Scott Boatwright removed the interim tag earlier this month, making official a post he held since August following Niccol’s departure. The industry vet served as COO for seven years prior and was part of Arby’s Restaurant Group for 18 years before that.
With Boatwright at the helm, Chipotle remains committed to strategic goals outlined to investors in recent quarters: expanding to 7,000 North American locations, increasing AUV to over $4 million, and enhancing restaurant-level margins alongside international growth, with the Chipotlane as a common-thread catalyst.
In Q3, Chipotle reported a 13 percent sales increase to $2.8 billion, driven by a 6 percent rise in same-store sales and a 3 percent uptick in transactions. In-restaurant sales surged by 80 percent compared to Q3 2023, and digital sales mixed 34 percent.
Chipotle ended the quarter with 3,615 stores systemwide and $3.18 million AUVs.
