- Chipotle's digital sales exceeded $1 billion for fiscal 2019, marking a 90% increase from fiscal 2018. For the year, revenue rose 14.8% to $5.6 billion, and Chipotle completed its digital pickup shelf and digital make line rollout and expanded delivery to over 98% of its network, CEO Brian Niccol said during a company earnings call Tuesday.
- Digital sales spiked 78% to $282 million during Q4 2019, Niccol said, and digital orders made up nearly one-fifth of the company's sales during the quarter, according to a company release. Q4 sales grew 17.6% to $1.4 billion, and net income for the quarter hit $72.4 million compared to $32 million in Q4 2018.
- Chipotle will roll out between 150 and 165 new locations this year, and more than half of the stores will be equipped with "Chipotlane" mobile pickup drive-thrus to maximize digital sales growth. This will more than double the number of Chipotlanes on the market, Niccol said. Chipotle is also testing a restaurant design that incorporates its mobile pickup shelves to an integrated digital pickup portal, he said.
Chipotle's digital achievements are striking, especially given the long runway the company has laid out for future growth via its new Chipotlane model and enhancements to its loyalty program.
Across the restaurant industry, digital ordering reached $26.8 billion in sales last year, and digital orders are expected to rise in the double-digit range this year, according to NPD Group data. Chipotle's loyalty gains will help it capture this growing business opportunity. The Mexican chain has accrued 8.5 million loyalty members just one year after the program's launch, and Niccol said that the company is beginning to leverage this network with more personalized offerings — a strategy it will double down on this year.
"While in 2019 we focused on member growth, in 2020 we will not only further increase enrollment but, more importantly, look to optimize the use of database marketing to incent[ivize] behaviors as we build out our CRM capabilities," he said during the company earnings call.
Analysts are bullish on the move. In a report emailed to Restaurant Dive, BTIG analyst Peter Saleh said "the deliberate shift to more personalized marketing for loyalty members this year has the potential to materially increase frequency and spend, while at the same time reducing promotions such as free delivery."
Niccol said that though third-party delivery was a major component in the early days of its digital growth, today the company is seeing gains in its order-ahead business. He also shared that Chipotle is open to third-party delivery partnerships beyond its current deals with DoorDash and Postmates.
"I do think ultimately the delivery marketplace is not going to be an exclusive proposition," he said during an earnings Q&A. "We're continuing to talk to all the players. And when the right opportunity presents itself, we'll figure out whether to bring on additional players or not."
The chain is still testing digital-focused store designs at new and existing locations across Chicago, Cincinnati, Phoenix, San Diego and Newport Beach, California. Designs include multiple restaurant formats, including standalone "Chipotlane" stores, urban storefront units and locations with walk-up mobile pickup windows. Chipotle will analyze transactions and diner feedback to choose which design to launch nationwide, according to CNBC.
Though Chipotlanes are driving strong results for the chain, the units could face competition from other trendy fast casual chains including Blaze Pizza, The Habit Burger and Cava, which are also targeting more standalone and end cap locations. These Chipotle units are more expensive than the average store model, racking up an extra $75,000, but have a 50% higher digital mix — a promising ratio for the brand. With all of these strategies in play, it's likely Chipotle's digital sales will experience significant growth again this year, a key determiner going forward in the restaurant industry.