From direct delivery to a fresh tagline and marketing push, Chipotle has made good on many of CEO Brian Niccol’s early targets. Next up is the fast casual’s long-awaited loyalty program. Chipotle kicked off October with an announcement that it’s piloting a new platform, Chipotle Rewards. The points-based system is currently live in three test markets—Phoenix, Kansas City (Kansas and Missouri), and Columbus, Ohio. Chipotle is targeting 2019 for a national launch.
"At Chipotle, we've been very focused on making our brand more accessible and growing love and loyalty among our customers," said Curt Garner, chief digital and information officer at Chipotle, in a statement. "Now, with Chipotle Rewards, the more you Chipotle, the more you earn points towards free Chipotle."
The company famously spent millions on its last effort—Chiptopia—a three-tiered offering that launched July 2016 as a summer-focused three-month promotion tied to the number of times customers visited Chipotle. By late July, the program had more than 3.6 million participants and accounted for 30 percent of transactions. As September rolled around, Chipotle said more than 3.1 million people were registered and had used Chiptopia cards. About 1.2 million users signed up in August. This led to a lot of free burritos for Chipotle. Guests earned free meals after their fourth, eighth, and 11th visits each month. So if they bought 12 burritos over three months (four a month), they were eligible for four free burritos. This 33 percent return rate was simply not a long-term play for Chipotle’s bottom line. The company also ended up forking out roughly $20 million to more than 85,000 Chiptopia members who qualified for the biggest draw—a catering package for 10 worth about $240.
And while the program gave away plenty of burritos, it didn’t seem to help inspire actual loyalty. YouGov BrandIndex data at the time showed the consumer perception was suffering (still a holdover from the E. coli outbreak) on Chiptopia’s July 1 launch date, with brand quality clocking a paltry 9.4 on a scale of –100 to 100.
During a special investor’s call this past June, Chipotle executives hinted a loyalty program was in the works. It was a logical next step with digital sales picking up. Chipotle’s digital sales lifted 33 percent in Q2 to 10.3 percent of sales, an eye-popping acceleration from 20 percent in the first quarter. Even more, Chipotle’s app and website showed 4 million active monthly users, a whopping 65 percent increase since the end of last year.
The new Chipotle Rewards platform can be signed up from the app or website. Guests who enroll earn 10 points for every $1 spent, with 1,250 points resulting in a free entrée.
“Offering a free entrée of choice allows customers to choose their favorite menu item without restrictions like other loyalty programs,” Chipotle said. “To drive even more digital orders, for a limited time customers can earn 15 points for every $1 spent in the app and online. Chipotle knows instant gratification is important, so customers in pilot markets can also earn free chips and guac after their first purchase using Chipotle Rewards.”
The program also includes a hyper-personalized CRM program running behind the scenes, which Chipotle said allows for targeted communication to drive trial, menu exploration, and brand affinity.
Like all of Chipotle’s recent initiatives, the fast casual is running the platform through a new “stage-gate process,” that allows the brand to test, learn, listen to customer feedback, and iterate extensively before moving ahead with a national launch. This is perhaps a nod to some past rocky rollouts, including queso.
“Chipotle Rewards is a critical part of our efforts to digitize and modernize the restaurant experience," Garner says. "Through this program, we can show some love to Chipotle super fans, create a true one-on-one relationship with our customers and unlock new opportunities to engage through offers and discounts—from delighting customers on their birthdays to incentivizing incremental purchases to providing rewards for engaging with the brand's mission to cultivate a better world."
Chipotle said it has seen steady growth in digital orders since launching direct delivery. It has also “achieved industry-leading delivery times” thanks to digital pick-up shelves installed at restaurants, as well as tech-enabled second-make lines that allow employees to quick prepare food as digital orders arrive.