Chipotle Mexican Grill is seeing digital sales rise and in-person visits fall. The company announced on Thursday (Oct. 21) that in the third quarter of 2021, the company’s digital sales grew 9% year over year, having grown 203% in Q3 of 2020. Notably, though digital sales rose, they made up a smaller share of overall sales — 43% versus 49% the previous year.
“In fact, our year to date, digital sales of nearly $2.7 billion, or just slightly below the $2.8 billion, we achieved during all of last year,” the company’s Chairman and CEO Brian Niccol told analysts on a call.
Last quarter, the company shared its goal to engage consumers across channels. On a call with analysts, Niccol shared that omnichannel customers currently make up 15-20% of the company’s customer base, while around 65% prefer to order in-restaurant, and almost 20% tend to stick to digital.
This reliance on visits to the physical restaurant could spell difficulty in months to come. Research from location analytics firm Placer.ai finds that while Chipotle’s in-restaurant visits remain below pre-pandemic levels, they are on the decline. In July, visits were up 12% from the same period in 2019, but they fell to being up 8% in August, and foot traffic was up only 3% from 2019 in September.
However, the company is looking to drive up traffic with investments in its loyalty program. In the quarter, loyalty membership grew 7% from 23 million to 24.5 million, though the company did not give any insight into what share of those are active members.
“What we have demonstrated over time is people [who enroll] in our rewards program or a loyalty program, they come more often, and they spend more,” said Niccol. “[The program] takes advantage of new users, medium users or heavy users who want to engage with the brand, and then we’re able to influence their behaviors, resulting in more frequency and higher tickets.”
The company has made significant changes to its loyalty program in recent months, introducing new rewards options that allow the chain to drive spending without necessarily giving away free food. As Nicole West, the brand’s vice president of digital strategy and product, told PYMNTS in a recent interview, consumers are willing to engage more, even if they are rewarded with non-financial incentives such as gamified achievement badges.
“I [have been surprised by] the excitement level for Extras, even when there's no monetary value to them,” she said. “Sometimes simply being rewarded for doing Chipotle the way you Chipotle is enough for our customers, and they get excited about that.”
Read more: Chipotle: Brands Can Drive Loyalty Without Bearing the Cost of Freebies or Discounts
While visits may have fallen relative to 2019 in the past couple of months, Niccol noted on the call with analysts on Thursday that the brand has the opportunity to leverage its loyalty program to drive visits. As Chipotle gains more data about consumers through its loyalty program, the brand is able to be more specific with its messaging, which, Niccol said, can “consistently attract more visits” — both from those enrolled in the loyalty program and those not.
“No doubt the loyalty program has moved from a crawl to the walking stage, and we still have a lot of room to grow,” he said. “Offering new ways to engage with Chipotle is central to the ongoing evolution of our digital business.”
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October 22, 2021 at 05:42AM
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Chipotle Aims to Convert Its Majority In-Person Customer Base to Omnichannel with Loyalty Investments - pymnts.com
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