Inside Chipotle’s Pandemic Success
The burrito chain’s digital playbook enabled it to compete with delivery marketplaces like Doordash and Uber Eats
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.
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.
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.