Chipotle’s rise in online orders bodes well
For restaurants – quick service restaurants in particular – three D’s fuel sales: delivery, digital, dining.
To this end, Mexican Grill Chipotle posted digital sales up more than 202% year-over-year to $ 776.4 million.
That was nearly half of the company’s revenue for the quarter at $ 1.6 billion.
And looking at the most recent results, about half of digital sales (i.e., about a quarter of consolidated revenue) were made through delivery, and the rest came from order-to-order transactions. advanced.
Part of this big digital shift has to do with the company having a decidedly sticky relationship with the 17 million members enrolled in its rewards program.
“A reduction in restaurant services, more people working from home, increased advertising and digital awareness, recent partnerships with Uber Eats and Grubhub, and expanded digital capabilities in Canada have all helped to attract new customers to our digital ecosystem. while increasing convenient access to Chipotle, ”said Brian Niccol, President and CEO earnings call with analysts.
As Niccol said, during a more in-depth discussion of the rewards program, “we’re seeing an increase in frequency across the board with consumers, which translates into an extremely solid ROI.” He added that the loyalty program exists as “a valuable tool for understanding consumer behavior that will allow us to improve their trips and ultimately generate higher sales.” We can also use these learnings to re-engage members if their visits decline, which should effectively maintain the sustainability of our digital platform. “
Chipotle’s huge increase in digital sales and strong revenue contribution speaks volumes about how consumer behavior has changed in the aftermath of the pandemic and how bad that behavioral change has become (and will remain). ) rooted. The delivery industry, after all, increased by double-digit percentages Year after year.
most recent PYMNTS study on consumer behavior, titled “The Emerging Post-COVID-19 Consumer: Mapping The Evolution Of Consumers’ Shifting Payment Preferences”, shows that among nearly 2,000 respondents, individuals expect the impact of the pandemic extends for up to 374 days before abating.
And when it comes to ordering food, an overwhelming percentage of consumers – over 80% – say their online ordering habits will stay online (in whole or in part) after the health crisis ends. current, against only 19% who say they will “return” to past behaviors, which would include meals on site, orders being taken at the counter.
As the report shows, COVID-19 also underlies a pivot towards using food aggregators to order in restaurants and QSRs. PYMNTS research shows that 45.3% of consumers who use food aggregators more now than before the pandemic started do so because they fear restaurants will be crowded. Up to 22% of consumers noted that aggregation services performed ‘better’ than before the coronavirus, indicating that investments in technology on the part of companies themselves are paying off.
Interestingly, only 10% of those surveyed said “lower prices” was a reason they chose aggregators to order their meals. This shows us that for now, consumers are not particularly afraid to pay for the digital experience, and for speed.
In fact, during the Chipotle question and answer session, with a focus on delivery prices transmitted through delivery channels, both white label and in the market, CFO Jack Hartung said, “ we treat the white label and the market the same in terms of menu prices. So in a given market we have different prices, in different markets we have different delivery prices. But if we increase the prices, for example by 7% with our white label, we do the same with the market. There is no decline in consumer demand, he said, although there may be slight lags from delivery to upcoming order and pickup, which is actually a category of high margin for the company. (Regarding the commissions paid to the applications, we noted in the last Food order tracking that there has been a wave of efforts in various cities to cap these commissions.)
Cross-reading for restaurants
Chipotle’s results bode well and show a roadmap for restaurant digital efforts. They could of course use the Tailwind digital control offers. A few weeks ago, in Semi-annual check from PYMNTS On the state of Main Street small and medium-sized enterprises (SMEs), sentiment has improved a bit. Up to 54% of the 500 SMEs surveyed said their finances have improved in recent months. But as relevant to the restaurant business, 61% of businesses in this industry are confident they won’t have to shut down before the pandemic is over. About 14% of them say they have saved enough in emergency funds to last three months, even while 94% say they have seen their turnover drop due to the virus. This can give at least some cash to make the necessary investments to meet consumers where they want to order – online, of course.