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Operations

Chipotle needs to crack the throughput code

The chain’s future growth rests on how many burritos and bowls it can churn out every minute, CEO Brian Niccol said.
Chipotle Mexican Grill
Photo courtesy of Chipotle

For Chipotle Mexican Grill CEO Brian Niccol, the chain’s future success rests on one seemingly simple calculation:

How many burritos and bowls can it churn out every minute?

Right now, with all of its dining rooms reopened, a digital business that exploded during the pandemic, and thousands of new hires in its workforce, Chipotle’s operational cogs are a bit rusty, Niccol told analysts late Tuesday.

“We still have work to do to get our great throughput model back in place,” he said. “It’s been, geez, well over a year since folks saw lines. And, for some of our employees, it’s the first time you’re seeing lines.”

Chipotle said this week it had regained about 70% of its pre-pandemic, dine-in business, while about 80% of digital sales gained during 2020 had stuck around. With that in mind, Niccol said the 2,853-unit chain would be investing in throughput boosters for both the traditional front line and the digital makeline.

“We’re looking at investments on helping our teams with smarter prep, having the right food available at the right time, better forecasting, better staffing,” Niccol said. “These are all things that will just allow us, frankly, to provide more burritos and bowls digitally, as well as more burritos and bowls on the front line. We’re really focused on the fact that we’ve got a lot of capacity in these restaurants.”

During the quarter ended June 30, Chipotle surpassed its peak average unit volumes of $2.5 million. And now Niccol has his eye on loftier territory.

“We have growth strategies that will take us to the next leg of our journey, $3 million AUVs,” he said.

Part of those strategies include growing to 6,000 restaurants in North America.

And those restaurants, of course, will need workers—workers who are well-trained to handle Chipotle’s fast-paced, multi-pronged burrito business.

In April, Scott Boatwright, Chipotle’s chief restaurant officer, told Restaurant Business that the chain was forced to throttle its digital business during peak times. But, he added, there was still plenty of white space for growth available to the chain.

“The capacity, while not limitless, we are not anywhere near capacity,” Boatwright said.

As it gets back up to speed, Chipotle is also mulling the best time to up the operational complexity, saying that a new protein—Smoked Brisket—had been green-lighted by the chain’s “stage-gate” testing process to roll out on menus systemwide.

Smoked Brisket will be a seasonal item, with no firm date on its launch, Niccol said.

Not only is Chipotle doing brisk business on both digital and on-premise fronts, it is also seeing more orders coming in earlier in the day, he said.

“The most important leading indicator for us is we’re starting to see our lunch business come back,” Niccol said. “And, what’s great about that lunch business, is, it’s usually an individual that, frankly, we hadn’t seen in a while.”

More business is great, of course, and Chipotle’s revenue soared 38.7% in Q2, to $1.9 billion. But whether the chain can not only sustain but pick up that pace rests on boosting throughput.

“Whatever we can do to invest in our people or our operation to enable them to provide more burritos and bowls per minute at the highest level, that’s how we think about it,” Niccol said.

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