Guacamole fans are spending more at Chipotle when using the fast casual chain’s mobile ordering app. As the following Barron’s article reports, Chipotle says that the average digital order rings in at $16 compared with $12 for an in-store order.
A lot of what Chipotle Mexican Grill (CMG) hopes will push the business forward under newish CEO Brian Niccol is still in development—but investors continue to be happy with what’s happening now, the company’s shares rising more than 6% in Thursday evening trading.
As more stores offer digital ordering, Niccol said, the company is seeing tickets rise. Delivery orders are generally around $16, higher than the typical $12 in-store order, Niccol said, with customers generally ordering more food—say, chips and guacamole. (Some 1,000 restaurants could have a second make line, used to serve those orders, by year’s end, with most or all having one by the end of 2019.)
And Chipotle plans to expand a test program that gave four stores pickup windows that only serve advance orders; they were put in new stores, rather than retrofitted into existing ones. “That is proving to be an access point that customers are really interested in,” Niccol said.
Looking ahead, management directed investors toward a full-year comparable-restaurant sales growth “in the low to mid-single digits,” a more upbeat outlook than previously given, and toned-down plans for new restaurant openings. “We feel good about the way we ended the quarter and the way we’ve entered the quarter now,” CFO Jack Hartung said on a Thursday conference call.
So a 33% higher mobile order vs. in-store sale is not too shabby. Chipotle is not the only restaurant that is finding this as other fast casual shops report similar findings. Mobile app ordering systems are able to easily take a customer through a sale, while suggesting different up-selling offers throughout. This is something that a counter person cannot do on a consistent basis when taking an in-store order. Or for that matter, even a staffer taking a telephone order. Lesson learned: mobile ordering is a must-have for QSRs and fast casual restaurants—it will drive higher sales and repeat business showing customers a more convenient and time-savings experience.
Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group