Forward-thinking fast-casual chains and quick-service restaurants (QSRs) were prepared for consumers’ shift to digital sales during the coronavirus pandemic, but many companies have learned that simply having digital channels in place is not enough to weather the competition wrought by an economic crisis. Few could have anticipated the importance — or difficulty — of achieving a personalized, in-store-like experience via digital at a time when personal interactions are few. Some are delivering this with loyalty rewards programs.
Fast-casual chain Chipotle Mexican Grill, which has more than 2,700 global locations, has ramped up efforts to enhance customers’ digital experiences to match those it offers in-restaurant. Nicole West, Chipotle’s vice president of digital strategy and product management, said Chipotle Rewards has more than 17 million members and enrollment has continued to grow since the pandemic’s onset.
“We are seeing an increase in frequency across the board,” West said in a recent interview with PYMNTS. “As we continue to analyze data and grow membership, Chipotle will continue to provide increased personalization and customized offers to meet our guests’ needs.”
Chipotle responded to customers’ evolving needs earlier this year by adding Uber Eats and Grubhub to its roster of third-party delivery partners as well as improving its app with a group-ordering feature, according to West. The Newport Beach, California-based company also focused its attention on improving its rewards program, which provides customers with 10 points per $1 spent and gives diners a free entree once they reach 1,250 points.
Loyalty Programs Become Crucial Amid Rising Digital Sales
Restaurant closures and dining room capacity limits due to the pandemic have fueled unprecedented growth in curbside pickup, takeout and drive-thru orders, with one survey showing that the share of off-premises U.S. sales has swelled to 39 percent since March, up from 20 percent in 2019. This growth has come with acute economic distress in the sector, however, and competition for shrinking consumer dollars continues to be fierce. Consumers like the incentives that come with loyalty programs and prefer to order with restaurants that have them. One recent PYMNTS survey found that 38.7 percent of restaurant customers said that the only reason they don’t use loyalty programs is because their restaurants do not offer them. Another study found that 80 percent of consumers would order online or via mobile app if eateries rewarded them for doing so.
West said that Chipotle, which has store locations in 43 states, aims to cater to the unique, local, order-to-eat habits of its customers across the country.
“Our customizable menu allows guests to create their meals exactly as they want it,” she said. “We worked hard to create a digital experience that would mirror an in-restaurant experience with the capability to order ‘light’ or ‘extra’ of your favorite ingredient. We will continue to optimize data from Chipotle Rewards to ensure maximum engagement with members reflecting their evolving Chipotle needs.”
A Digital-Only Focus
West said Chipotle’s digital transactions reached nearly 50 percent of total sales in Q3 2020, up from 20 percent pre-pandemic. The publicly traded company reported its digital sales increased by 202.5 percent year over year in Q3 to $776.4 million, making it possible for the company to open 44 new restaurants during the quarter despite having to permanently close three. About 10 restaurants remain temporarily closed inside malls and shopping centers due to COVID-19 restrictions.
Chipotle also recently opened its first digital-only restaurant in Highland Falls, New York, in mid-November. The new digital kitchen concept eliminates the need for dining rooms, service lines and in-person checkout. Orders are taken only through the Chipotle app or website or via a third-party delivery platform.
“While the Highland, New York, Chipotle Digital Kitchen location is still new, we have received tremendous interest in the concept,” West said. “The Digital Kitchen has been an integral part of our innovation pipeline prior to the pandemic, and we will continue to evaluate the test for future expansion.”
The pandemic-driven shift to higher volumes of mobile and online food orders has created opportunities for QSRs to capture new and existing consumers’ attention for the long term through personalized customer experiences. Restaurants that can offer incentives through customized loyalty programs will better endure the shock waves that the pandemic is causing throughout the restaurant industry.
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