It’s little surprise Chipotle Mexican Grill would see explosive digital growth during an unprecedented period in which many dining rooms were forced to close and diners were stuck quarantining at home.
The bigger question is: Will those digital customers stick around once they can eat their burritos inside a Chipotle again?
According to Chipotle CEO Brian Niccol, that answer is a resounding “yes.”
“We’re seeing a scenario where digital is going to prove to be very sticky, and people look forward to getting back out and going into our restaurants,” Niccol said during a call with analysts late Tuesday to release the chain’s Q4 earnings.
Chipotle’s digital rewards program had fewer than 10 million loyal members at the start of 2020. Today, the program is edging close to 20 million registered users. And the chain is finding new, creative ways to engage them.
“You’ve got twice the amount of people that we can influence behavior with on a pretty one-to-one basis,” Niccol said. “So, that’s why you hear me talking about why I see this being a driver going forward.”
Currently, about 60% of Chipotle’s rewards program members are active, Niccol said. But the brand is working to re-engage less-active members on multiple platforms. The program has “dedicated journeys” to welcome new members, increase dining frequency and minimize “lapsing behavior,” he said. The chain’s customer relationship management platform has a “keen focus on retaining digital customers who have experienced the brand in new ways over the last year.”
And there have been lots of those consumers, to be sure. Chipotle Tuesday reported 174% growth in digital sales year-over-year. Digital sales now make up 46% of the chain’s total sales, or $2.8 billion. Chipotle locations are seeing digital-only average unit volumes of $1.1 million a year, more than some chains make per unit in total.
In fact, 140 of the 500 largest restaurant chains had AUVs of $1.1 million or less, according to 2019 data from Technomic, a Restaurant Business sister company. That means Chipotle's digital unit volumes are higher than the volumes of 28% of the country's largest chain restaurants.
With the pandemic continuing to surge in parts of the country, about 40% of Chipotle’s dining rooms remain closed, with the rest operating at reduced capacity.
Even in markets with open dining rooms, the chain is still retaining much of its digital business, Niccol said.
“There is a fair amount of people that when they have the opportunity, they will want to go back to their dining occasion,” he said. “The thing I find really promising is that they’ve also adopted new, off-premise digital occasions that they’re not going to abandon. And when we look at the Venn diagram, of the world where it used to be, they were exclusive. I only did online, and I only do in-dining, and here was a few that did both. That’s changed. You’ve got a lot more people doing both.”
Jonathan Maze contributed to this report.
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