Noting that digital sales made up nearly half of all the orders leaving its restaurants in a recent quarter—a more than 200 percent increase compared with the same quarter last year—Chipotle has realized it needs better capacities for meeting digital consumers’ demands. Its responses include several experimental approaches as the restaurant chain seeks to figure out which is the best choice.
Outside West Point Academy for example, Chipotle opened the first Digital Kitchen, a storefront that only supports digital orders (via its website or mobile app) and pickup by consumers. People cannot drop in to place their orders, nor can they sit down to each once they receive their food. However, while waiting for their orders, they encounter an environment (e.g., sights, smells) that mimics that of a conventional restaurant.
Another possibility is Chipoltlanes, that is, drive-through lanes added to existing stores to facilitate pickups and speed up transactions. Here again, Chipotle likely would have dedicated lanes for digital orders, in contrast with the conventional drive-through lanes at fast-food restaurants.
In addition to reflecting the pandemic-induced trends of increased digital orders, Chipotle’s experiments address other challenges and needs. In particular, Chipotle certainly allows customers to place their orders through third-party delivery services, such as Door Dash. Approximately half of its digital sales are delivered by these other companies. But it hopes to lower this percentage by encouraging more consumers to place their orders directly with it, through the company’s own app or website. That’s because delivery through third-party companies cuts drastically into Chipotle’s profits, whereas pickups by consumers ensure it retains all the revenues.
Furthermore, Digital Kitchen locations can fit into much smaller storefronts than conventional Chipotle restaurants require, so they may be ideal for crowded, urban neighborhoods, where Chipotle’s growth has been limited thus far. Drive-through lanes also offer additional convenience, which many consumers prefer, regardless of whether they are social distancing or just in a hurry for lunch.
Discussion Questions:
- Which trends are driving Chipotle’s experimentation with various store designs?
- Do you anticipate that the Digital Kitchen or drive-through lanes will be successful? Is one experiment seemingly more likely to succeed than the other? Why?
Source: George Anderson, “Chipotle’s Expansion Plans Include Adding ‘Digital-Only’ Restaurants to its Menu,” Retail Wire, November 13, 2020