Chipotle’s Billion-Dollar Digital Empire is Built to Last

Take a look at any local fast-food joint and it likely has some kind of menu item appealing to local trends or cultural moments. Anyone up for a McLobster, courtesy of an East Coast McDonald’s?

These fast-food restaurants (also known as quick-service restaurants, or QSRs) can take advantage of split-second marketing opportunities and react with memorable campaigns. Oddly enough, though, those same QSRs are missing the mark when it comes to onboarding new digital experiences and meeting customers where they live. There is, however, one exception: Chipotle. 

Chipotle has become the QSR market’s top contender in tech adoption, posting unbelievable growth numbers that come as a direct result of a decidedly-digital reinvention.

Need to Know

• $1 billion in digital sales this year. 
• 88% digital sales growth year-over-year.
• Over seven million mobile rewards program members in less than nine months
• Digital sales represent 18% of Chipotle’s revenue, up from 4% in 2015. 
• 2,500 total stores with 150+ opening in 2020. Half of those equipped with fast pickup Chipotlanes.
• Chipotle’s stock is up over 80% this year.

Building a digital burrito empire

Chipotle’s most recent earnings tell the tale: 88% year-over-year growth in digital gross sales, coming close to $1 billion in total, encompassing 18% of the company’s income. The journey towards wholesale digital adoption started in 2017 with the redesign and launch of a new app, and ever since then, it seems like the burrito chain is releasing digital upgrades every month. 

For Nicole West, the VP of digital strategy and product at Chipotle, creating the best digital presence always comes back to one thing. 

“We offer simple, easy-to-use experiences that give customers the ability to order exactly what they want, when they want it, to be delivered to them in the way that they choose,” she says. “It’s all about beautiful, seamless simple experiences.”

Nicole West, the VP of digital strategy

Loyalty breeds success

At first, the seamless experience was all about the mobile app. But the company has expanded its digital offerings significantly. The most valuable part of Chipotle’s new presence is it’s most rewarding: the loyalty program. 

“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,” says West. “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.”

Less than a week after launching Chipotle Rewards through their app earlier this year, the program’s one-millionth member joined. That number is now well over seven million, and will likely top 10 million in early 2020. 

One of the most amazing things about building a robust app and a worthwhile rewards program, at least according to West, was the realization of what kinds of consumers flock to digitally native experiences. 

“One of the biggest learnings was the number of new customers who come to Chipotle for the first time via our digital ordering channel,” she explains. “We had made the assumption a couple of years ago that specifically, the mobile app would be for very frequent brand loyalists. And the website would be for the more medium-frequency customer. But we didn’t expect that a large number of first-time guests were coming to us through digital channels. That gave us a moment to pause and really think about our design strategy and put the customer at the center of that.”

That moment of pause led to a vast retooling of what digital meant to Chipotle. The QSR went all-in, embracing every aspect of their digital channels and completely reinventing themselves from the ground up. At the time, while McDonald’s digital kiosks and electronic order displays felt fresh and innovative, West and her team were thinking way ahead.

For the app and other digital ordering experiences, she knew that they had to appeal to both the brand loyalists as well as newcomers. Detailed user experience journeys were drawn out to ensure the process was, above all, authentic to the brand. 

“We looked for opportunities to make the experience very quick and convenient for the customer who comes in and knows exactly what they want,” says West. “That means opportunities to save favorites, and payment info, and do rapid reorder from the app or website.”

“We also have those new customers coming in through our digital experiences,” she continues. “We take care to make sure that it’s intuitive and simple enough that customers can explore and engage, and we give them prompts and pokes along the way to let them know where hidden customization features lie.” 

Above all, the digital experience needed to make sure customers, both new and loyal, could get what they needed and fast. 

“It had to be food first, and we laid out design paradigms that we needed to follow to achieve that.”

Chiptole built it, and they came

From that highly-used rewards program and app came a slew of other enhancements that are revolutionizing the way QSRs embrace digital transformation. The most recent upgrade is a completely revitalized restaurant design. Yes—the company is retrofitting existing locations and opening new spots to tailor to digital audiences. 

Windows called Chipotlanes are being installed, allowing consumers to place digital orders and grab them quickly by driving through. Walk-up windows are also being installed for the same purpose. These dedicated, ground-up redesigns and rebuilds are only for digital customers. Digital-only pickup lines are a standard now in many QSRs, but Chipotle took it one step further by building digital-only order assembly lines—a space for employees to build meals only for mobile customers. Mobile pickup shelves are also present at most locations. 

Chipotle plans to open over 150 stores in 2020, and half of those will be equipped with Chipotlanes. Due to the nature of the process (order and pay ahead of time), the average wait time for a Chipotlane order is 12 seconds—miles ahead of the four-minute industry average.

“Our holistic approach to this end-to-end experience has reduced friction and provided a convenient point of access for customers, and that’s been critical to our ability to grow digital over the past year,” says West.

For Chipotle, it was no longer enough to launch an app that allows people to pay ahead of time; physical store updates were necessary to create a compelling digital experience.

“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, Chipotle’s CTO.

Voice-activated burritos

Chipotle is still experimenting with more new ways to reach customers. Last month, the brand rolled out voice ordering with Alexa. The feature builds on phone orders powered by AI, launched earlier this year. Customers can reorder their favorite meals, and even though only 8% of consumers use voice assistants to order food and beverages, 20% of consumers are extremely interested in using the feature in the future. In total, close to 75 million US citizens use some form of voice assistant, so the market is waiting to be tapped. 

“With voice, we’re learning a lot,” says West. “By giving customers new access points, we’re learning how our customers interact with AI and how they interact with the brand by speaking to us.”

West and the Chipotle voice team have had a little fun with the AI ordering system as well. 

“I have been pleasantly surprised and have enjoyed watching as customers try to banter with our AI,” says West. “They’re asking questions that are independent of their order. They express their love for Chipotle, they ask how old are you, and they want to engage in a playful way which is really opening up the ability to have some fun.”

No avocado left unturned

The digital insights are unlocking new ways for Chipotle to interact with its customer base in fun ways. As part of the Alexa rollout, Chipotle gave every loyalty member named Alexa a free Amazon Echo Dot, and the brand continually finds new ways to surprise customers with double points days, free products, and other brand-aligned activations. 

“This end-to-end experience—where physical components combine with an app that customers love, a website that allows them to learn more about the brand, and a loyalty program that incentivizes engagement—that entire digital system has come together amazingly and it sets us up incredibly well for the future.”

Chipotle’s digital future is bright, but there’s always more to be done. West talks about how proud she is of her team of engineers and creatives, and how there are a lot of exciting opportunities the brand can explore with all of the data it has collected relating to loyalty and engagement. 

“I don’t know if there is a finish line,” she says. “The goal isn’t to necessarily drive most customers to digital. It’s about continuing to offer our customers the ability to order however they want to order, and no matter what, keeping that experience authentic.”