Chipotle Digital Surges 78%, is Now One-Fifth of All Sales

Need to Know

• Chipotle’s digital sales grew 78.3% in the recently-reported Q4 2019 and 78% year-over-year
• Almost one-fifth (19.6%) of all sales at Chipotle are now digital (including Chipotlanes, order ahead, and delivery partnerships).
• Digital orders quadrupled over the past three years and exceeded $1 billion for fiscal 2019.

Analysis

Thanks to Chipotle’s digital efforts, the quick-service restaurant beat expected earnings and posted same-store sales of 13.4% versus the expected 9.5%.

On Tuesday’s earnings call, CEO Brian Niccol said results were driven by a number of fundamental strategies, including loyalty and leveraging a digital-only make line to embrace mobile and online customers.

Chipotle’s digital sales of $1 billion in 2019 show 90% growth year-over-year, and have quadrupled over the past three years. Part of the success has been its premier loyalty program.

Niccol expands: “Now that we have many of the digital tools in place, 2020 will be about using them more efficiently and really leveraging our rewards program, which currently has more than 8.5 million enrolled members and is one of the fastest-growing restaurant loyalty programs in history.”

Nicole West, VP of digital for Chipotle, told Digital Magazine that “I think loyalty and rewards programs have become table stakes because they allow brands to learn enough about our customers and deliver a highly personalized engagement opportunity.”

“The more we know about how you interact with Chipotle, the better your experience can be in the future. Consumers are aware of that. They also want to be rewarded for that frequent engagement, and it’s a really easy case for consumers to make,” says West.

Along with the expansion and personalization of its loyalty program, and adding one to two new menu items per year, Chipotle also invested in employee growth and restaurant modernization plans that have resulted in a large return on investment.

This is a very different earnings call to that of McDonald’s, who disappointed analysts by failing to hit forecasts of $1.69 billion in sales, at only $1.61 billion. For comparison, McDonald’s reported 4.8% year-over-year same-store growth in Q3 2019, compared to Chipotle’s recently-reported 13.4% growth.

Expansion and personalization is the goal for Chipotle in 2020, with a plan to add between 150-165 new restaurants in the new year, half of which will have drive-through Chipotlanes. This is an increase to the 140 restaurants opened in 2019.

Niccol adds, “Personalization and engagement are the cornerstones of our revolving loyalty strategy. We are encouraged by the early signs of transaction increases across all frequency bands. We expect this lever to become a bigger driver in the future as we gain more experience gathering customer insight while continuing to expand our digital ecosystem.”