Chipotle’s expansion plans include adding ‘digital-only’ restaurants to its menu
Chipotle Mexican Grill has announced plans to open its first “digital-only restaurant” tomorrow. The Chipotle Digital Kitchen, as it is being called, is located “just outside the gates” of the West Point military academy in Highland Falls, NY, and will allow cadets and other consumers in the area to place online orders for delivery or pickup. No matter their military rank, whether a freshman plebe or a general in the army, none of the restaurant’s customers will be able to take advantage of sit-down service.
The chain said that the new concept will enable it to restaurants in urban areas that don’t have the space to accommodate full-size format units. Chipotle is making the move after having seen its online sales skyrocket since the novel coronavirus pandemic hit the U.S. The restaurant chain reported total revenues growing 14.1 percent in the third quarter, with the increase driven primarily by its digital business, which was up 202.5 percent during the period. Online sales represented 48.8 percent of Chipotle’s total during the period, helping to drive its same-store results up 8.3 percent.
“The Digital Kitchen incorporates innovative features that will complement our rapidly growing digital business, while delivering a convenient and frictionless experience for our guests,” said Curt Garner, Chipotle’s chief technology officer, in a statement. “With digital sales tripling year over year last quarter, consumers are demanding more digital access than ever before so we’re constantly exploring new ways to enhance the experience for our guests.”
Roughly half of Chipotle’s online sales during the third quarter were delivered through a variety of third-party partners, with the balance picked up at the chain’s locations by customers. The downside of deliveries for the chain is the fees that it pays partners, which weigh on operating profits.
Chipotle is looking to increase the pickup share of its business and has focused on rolling out Chipotlanes, the chain’s version of a drive-through, whereby customers order ahead online or via the chain or third-party app before picking up their meals.
Customers who place orders at the Digital Kitchen for pickup will go to a separate lobby with its own entrance. The lobby, according to Chipotle, will allow customers to experience the same kitchen views, smells and sounds of one of its traditional restaurants.
- Chipotle To Open Its First Digital-Only Restaurant – Chipotle Mexican Grill
- Chipotle Announces Third Quarter 2020 Results Q3 Digital Sales Tripled Year-Over-Year And Accounted For Nearly Half Of Sales – Chipotle Mexican Grill
- Chipotle battles escalating delivery costs – RetailWire
DISCUSSION QUESTIONS: Do you think digital-only restaurants are a viable option, beyond the pandemic, for operators to expand into areas where they normally would not think to open? Is Chipotle’s brand appeal and operation better positioned to succeed with a digital-only location or is this something that many fast-casual restaurants could/should also do?