It seems Chipotle has one-upped itself again in terms of sales numbers. For the quarter ending on Jun 30, digital sales increased 216.3 percent to $829 million. Digital sales made up well over half — 60.7 percent — of Chipotle’s overall sales. More than half of those sales are pickup, with the rest coming from delivery, CEO Brian Niccol said on this week’s earnings call.
As we’ve discussed before, a big reason the brand has managed to not just survive but break sales records during the pandemic is that Chipotle has been aggressively pursuing its digital strategy for a few years now. And between the first quarter’s earnings call and today, the company has doubled-down on its drive-thru lanes for mobile orders, launched a direct-to-consumer farmer’s market for its suppliers, and created a virtual version of its famous assembly line, among other things.
A restaurant breaking sales records during a devastating pandemic is news enough, but Niccol outlined multiple other new developments, most notably around the company’s delivery strategy. He noted that “partnering with all the major third party delivery aggregators has led to an increase in orders, a reduction in delivery time and cancellations and an improvement in overall customer ratings.”
However, for both independent restaurants and mega chains like Chipotle, with third-party delivery come sky-high, controversial commission fees that eat into profit margins. In response to those as well as some higher supply chain costs, Chipotle said it would test raising the prices on items for third-party delivery. “Similar to what many of our peers are already doing, we’re about to experiment with delivery menu prices as a way to potentially help offset this headwind and fully capture the margins expected at this volume,” said CFO John R. Hartung.
Hartung didn’t elaborate much on the call about where those tests would take place, how long they will run, and how much higher items on third-party delivery sites would be compared to ordering for pickup via the Chipotle app.
Chipotle may be one of the undisputed leaders in terms of QSRs aggressively pursuing digital, but it’s hardly alone. Starbucks has said it is reformatting many of its traditional cafe-style stores to be digital-focused to-go locations, Burger King is testing more delivery hotspots, and Taco Bell has launched a brand-new loyalty program.
Niccol said on this week’s call that he expects order-ahead transactions to continue to be a major driver of future growth for the company. Whether that means the chain will break another record come next quarter remains to be seen.
Leave a Reply