April 22, 2021 at 04:47AM

Chipotle Mexican Grill’s digital sales continue to soar, even as the first wave of newly vaccinated consumers begin to return for in-restaurant dining. The company announced Wednesday (April 21) that digital sales increased 134 percent year over year for the quarter ending March 31, 2021.

Despite this astronomical growth, the channel is actually growing significantly slower than at the height of the pandemic, with digital adoption gradually decelerating. In 2020’s second quarter (ending June 30), the company saw 216 percent digital sales growth, as quarantined consumers turned to digital channels at unprecedented rates; in the third quarter (ending Sept. 30), this number decreased slightly to 203 percent year over year growth; by the fourth quarter, growth had dipped below 200, down to 177 percent. Even with this slowing down, the company more than doubled its digital sales this past quarter.

“Momentum continued to build within the quarter, with March setting a new record for digital transactions, supported by our best-ever digital order-ahead month — over 800,000 app downloads, and the most new digital customers since May of 2020,” Chief Executive Officer Brian Niccol said on a call with analysts. “… Our digital sales are now slightly above the COVID peak from last year … We also continue to see outsized digital performance in Chipotlanes, which have revolutionized the drive-thru experience towards order-ahead for pickup transactions, which is our most profitable channel.”

During the quarter, the company announced several changes that could affect its digital channels, for better or worse. It launched a pilot test of its new carside pickup program in California, announced a price hike for delivery on third-party aggregators, and invested in autonomous delivery company Nuro.

The company also incentivized consumers to try out its online ordering channels by adding quesadillas to the menu, available exclusively through the restaurant’s app and its website, which, Niccol said on the call, was the “first new customizable entree in 17 years” and the “most requested item by guests not on our existing menu.” He noted that this addition is highly margin-friendly, “leverag[ing] our digital scale while removing operational friction by utilizing our digital kitchen.”

Discussing the delivery price hikes, Chief Financial Officer Jack Hartung explained, “We were running [a 13 percent price increase] at most of our restaurants across the country. We had a few that were at different levels, so we could see differences. We took the entire country up and another 4 percent, so we’re now charging a plus 17. And the reason we did that was, we were comfortable that the resistance that we saw was acceptable resistance … We were very comfortable that we could go another 4 percent.”

The company is continuing to refine its digital app and its loyalty program. “I think we’ve gotten a lot smarter with the analytics,” said Niccol. “We’re really trying to figure out how we move just from a commerce experience to an engagement experience. And so what we’re seeing is … people shopping more often with Chipotle, experimenting with other things on the menu, and obviously, there’s going to be further enhancements to our rewards program going forward.”

Overall, revenue was up 23 percent year over year to $1.7 billion, comparable restaurant sales were up 17 percent, adjusted diluted earnings per share amounted to $5.36, and the chain opened 40 new locations and closed 5.

“We’re definitely seeing is people want to be back in our dining rooms. You know, I’ve had the luxury of traveling recently,” Niccol said on the call. “And you know, [Chief Restaurant Officer] Scott [Boatwright] and I’ve been to numerous restaurants and it’s great to see the lines again in our dining rooms. And, you know, we’re seeing a nice rebound obviously in those dynamic sales because, you know, there weren’t any a year ago.”

He added that, even as in-restaurant dining returns, online sales are remaining high “for those occasions that they’ve built the behaviors around digitally,” noting that restaurant reopenings are “not cannibalizing from our digital business,” because the two channels “are really two distinct occasions.” Looking toward the post-pandemic future, the company will continue to focus on both the dine-in and the off-premises digital channels, treating them, effectively, as separate entities — according to Niccol, Chipotle intends to continue “managing these two businesses out of one kitchen.”

Chipotle’s Digital Growth Slows, Though Online Sales Remain High …

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