Inside Chipotle’s Pandemic Success

The burrito chain’s digital playbook enabled it to compete with delivery marketplaces like Doordash and Uber Eats

Kevin LaBuz
Marker
Published in
7 min readJan 30, 2022

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A masked employee behind a glass door with the “Chipotle Mexican Grill” logo
David Paul Morris/Bloomberg via Getty Images

Leveraging investments in tech and loyalty, Chipotle exits the pandemic in a position of strength. The company offers a case study in how to successfully competing with food delivery marketplaces like DoorDash and Uber Eats.

Liftoff

Covid-19 shook the economic center of gravity. Growth at companies like Peloton, Wayfair, and Zoom skyrocketed, but is now coming back down to earth. While not thought of as a work from home darling, burrito chain Chipotle is exiting the pandemic in a strong position thanks to a foresighted strategy and investments in technology and loyalty.

Chipotle’s digital sales grew from 18% of revenue in 2019 to 46% in 2020, when many restaurants were shuttered, to 48% through the first three quarters of 2021. During the peak of lockdowns in 2020, digital sales accounted for 80% of revenue. While other pandemic winners have sputtered as the economy reopens, Chipotle has consolidated its gains. Through Q3 2021, its digital sales are over $2.7 billion, in the same zip code as GMV for the luxury fashion marketplace Farfetch. That’s a lot of burritos.

Source: Chipotle quarterly earnings. Note: 2021 year-to-date through September 30, 2021.

In addition to in-restaurant orders, Chipotle sells through three digital channels: online ordering for in-store pickup, white-label delivery through its app and website, and third-party delivery marketplaces like Grubhub and Uber Eats. Digital revenue is split evenly between delivery and in-store pickup. Within the delivery channel, about 60% of orders are from third-party aggregators and 40% are from white-label, where Chipotle partners with DoorDash to fulfill delivery orders placed through its app. Food delivery marketplaces provide restaurants with two services: lead generation (i.e., customers) and delivery. Because Chipotle can drive organic demand itself, it pays a lower commission to DoorDash for white-label delivery orders versus orders from Grubhub or Uber Eats.

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Kevin LaBuz
Marker

Head of IR & Corporate Development at 1stDibs. Previously finance at Etsy, Indeed, and internet equity research at Deutsche Bank. Find me on Twitter @kjlabuz.