Chipotle CEO Brian Niccol outlined his turnaround plan in June, but still cautions it's "early days" for just about everything, from menu changes to price changes to a new customer loyalty program.
— Kristen Hawley
Chipotle’s latest marketing campaign, focusing on the “for real” ingredients and cooking process, is moving the needle, according to CEO Brian Niccol.
On the company’s third quarter earnings call, he discussed a “noticeable lift in sales” thanks to the campaign, which will run on television through mid-November and continue across digital channels through the end of the year.
“We are a more culturally relevant and engaging brand,” he said. “Our consumer research tells us that we are particularly relevant to millennials and Gen Z consumers, who share our values.”
Chipotle chief marketing officer Chris Brandt declined to break out the digital versus television advertising budgets. He did note that digital is an integral part of his strategy, but “we’ll feel free to shift things between more traditional linear media and digital media as the results warrant.”
Same-store sales rose 4.4 percent for the quarter, missing projections. Niccol also advised investors to expect “headwinds” in the fourth quarter.
Digitizing Chipotle and its in-restaurant experience is a core tenet of Niccol’s 2018 turnaround strategy. Digital sales — online ordering and delivery — accounted for 11.2 percent of sales for the quarter, up from 10.2 percent in the second quarter.
The company’s delivery push — and an associated free delivery app promo — may not be moving the needle on sales, but it’s certainly encouraged app usage. App downloads are up 25 percent from last quarter. Chipotle offers in-app delivery orders powered by DoorDash. Chipotle stores are also active on DoorDash and Postmates apps for delivery, and early results indicate that these channels reach different customers.
“We see very little customer overlap between our own in-app delivery and our third-party delivery partner apps,” said Niccol, who also referred to digital access as a “big unlock” for Chipotle’s business.
Current delivery time for Chipotle is under 30 minutes, which has become the de facto benchmark in the industry. “As we continue to remove the friction from the digital ordering and pick-up process, we would expect our delivery time advantage to continue to widen,” he said.
He’s also bullish on the customer satisfaction angle. In the 350 restaurants now optimized for in-store pickup, “we’re seeing increases in customer satisfaction, and we’re continuing to see a higher ticket, and it’s playing across all those digital channels that we expect, the app, the web and delivery.”