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The Spoon

Daily news and analysis about the food tech revolution

Chipotlane

Chipotlanes, New Store Formats, and Personalization Are Driving Chipotle’s $1B Digital Business

Chipotle outlined big plans for its digital business, which surpassed $1 billion in sales in 2019, according to the company’s Q4 earnings call this week. 

The fast-casual chain saw digital sales in Q4 alone jump 78 percent to $282 million, and Company CEO Brian Niccol said on the call that digital orders made up one-fifth of Chipotle’s sales during the same quarter. He also recapped the company’s efforts around delivery, off-premises ordering, and other digital-focused initiatives, including the one everyone seems to be really excited about — the Chipotlane.

These are drive-thru lanes dedicated to customers ordering ahead via the Chipotle mobile app. Like digital drive-thru efforts from other chains, Chipotlanes are meant to speed up service for this particular order channel, which has seen wait times get progressively longer over the last several years. The tactic is clearly working: Niccol said on the call that Chipotle will more than double the number of Chipotlanes in 2020 “because our guests love the convenience and it strengthens our economic model by making our highest margin channel more accessible.”

The other big area of focus Niccol and Chipotle outlined on the call was the new store design, which the company unveiled in December and is trialing in a few different U.S. cities. This new design is Chipotle’s take on the express store format, which many QSRs and fast-casual chains are pursuing these days to cater more to the ongoing demand for delivery and takeout orders. These restaurants have fewer seats, and, in the case of Chipotle, digital pickup shelves where customers can simply grab their order and go. The company is currently monitoring the performance of the new store design’s initial locations.

Niccol hinted at personalization on the call when talking about the company’s loyalty program, which it has grown to 8.5 million members over the last few years. While he didn’t dive into much detail, saying only that “personalization and engagement are cornerstones of our evolving loyalty strategy.” But we’ve already seen what more personalization can look like in the restaurant world, from McDonald’s installing Dynamic Yield’s AI tech in drive-thru lanes last year to Taco Bell’s recent push to make recommendations via its app more personalized to each customer. 

Niccol said he expects it “to become a bigger driver in the future as we gain more experience gathering customer insight, while continuing to expand our digital ecosystem.”

Chipotle Unveils a New Restaurant Design to Support Delivery, Digital Ordering

Chipotle today announced it is testing a design prototype for its stores aimed at further growing the chain’s billion-dollar digital business.

According to a Chipotle press release, the new digital-centric store design will be trialed in the following different Chipotle store formats: an urban storefront, a standalone restaurant with a Chipotlane, and an endcap restaurant with a Chipotlane. So far, the chain has stores in Chicago, IL, Cincinnati, OH, and Phoenix, AZ set to test the new design. It will also retrofit two existing stores in California.

“By better suiting our restaurants to accommodate the digital business, we’re able to finalize orders more effectively and provide a better overall experience for our guests,” Curt Garner, Chief Technology Officer, said in a statement.

The new store model will integrate longtime pieces of existing layouts, such as an open views of make-lines in the kitchen, with more recent changes the chain has made to accommodate the uptick in digital and delivery orders. That includes dedicated pickup shelves for digital orders, second make-lines meant to fulfill meals for delivery, and more Chipotlanes. 

In case you hadn’t guessed, Chipotlanes are a big part of that strategy. Unlike traditional drive-thru operations, those of Chipotle are designed specifically for digital orders. You cannot simply drive up to a menu board and order on the spot from a Chipotlane. Instead, customers order ahead via mobile and only use the window to pick up their food. Third-party delivery drivers can use this feature as well, saving themselves the trouble of having to walk into the store and locate their order. 

On Chipotle’s Q3 earnings call this past October, CEO Brian Niccol said the chain expects a total of 60 Chipotlanes by the end of 2019, though some of these new openings may shift into Q1 of 2020. Additionally, of the 150 to 165 new restaurants Chipotle plans to open in 2020, about half will include a Chipotlane. 

Whether by drive-thru, pickup shelves, or some other method, restaurant chains giving their stores makeovers for the digital-ordering era is a major strategy right now. Just yesterday, we wrote that Shake Shack is opening a new NYC location that will emphasize digital ordering and delivery. Starbucks, Krispy Kreme, and a boatload of others have already made similar moves.

As to how widespread Chipotle’s new design prototype will expand, the chain said in the press release it will asses the performance of each of the four new locations before deciding when and where to roll the concepts out nationally.