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    Chipotle's Digitization Strategies - How to Succeed Despite COVID-19

    Fueled by the belief that food has the power to change the world, Chipotle Mexican Grill is a global, American fast-casual restaurant chain. Based on the name of smoked and dried jalapeno pepper, Chipotle serves Mexican-inspired food such as tacos and burritos while boasting no artificial flavors, colors, or preservatives.

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    The brand has gone the extra mile to commit to local and organic produce, and are the first national restaurant brand to use only responsibly raised meat. Their commitment to the environment does not stop there, they have also pledged to divert 50% of their waste from landfills during 2020, and began recycling used plastic gloves into waste bags, used in 43% of their restaurants.

    Chipotle has experienced rapid growth in the past years, especially in Q1 of 2020, but the COVID-19 pandemic resulted in nationwide closures of over 2,600 restaurants, as customers started to stay home based on new guidelines. Although the blow was cushioned by their efforts in digital transformation, their next steps are crucial in determining how they will be able to succeed, especially in these trying times. 

    While in-store orders have dropped drastically by 75%, there has been a rise in delivery by 150% and ordering ahead by 120%. The launch of their new reward program has seen 11.5 million members to date, with a significant rise in members choosing to go digital from their previous store-only rewards program. Chipotle is also expecting up to 70% of its growth to stem from drive-thru lanes. These are just some of the changes Chipotle is experiencing, and what they're doing to leverage them. 

    In view of COVID-19, they have also improved health and safety, from increased sanitation, masks for employees, and packaging seals for delivery orders. Takeout shelves will also be deployed. Chipotle's CEO, Brian Niccol, emphasizes their desire to keep the elevated digital business up and running, to counter the fall in dine-in customers.

    The Digital Era

    As quick-service restaurants (QSRs) are scrambling to meet the changing consumer behaviors and needs, digitalization remains one of the key differentiating factors between brands. There is a need to employ the use of the right technology, to ensure that one's brand remains relevant. Diving into the specifics, let's take a look at the various digital trends in the QSR sphere. These can be split into industry trends, COVID-19 behavioral trends, and more specifically, Gen Z behavioral trends.

    Industry Trends 

    Mobile Applications are one of the ways that brands can use personalization to drive customer engagement, especially with the use of artificial intelligence. Starbucks has a real-time personalization engine that covers smart predictions and cross-sells based on the purchasing habit of the user. 

    This is accompanied by an omnichannel experience, which bridges the gap between online and offline services, making it convenient to suit the preferences of customers across different touchpoints. Customer data can be collected to deliver personalized promotions, which in turn encourage customer engagement and sales. 

    Geo-tagging or location-based tracking also allows brands to gain further insights based on their customers' behavior. A study shows that 69% of marketers are looking to employ location-based intelligence, mainly alongside loyalty programs to aid improve customer relationship management (CRM), and increase conversions.

    Artificial intelligence is what powers the trends listed above, with AI being incorporated in mobile applications, or used to streamline user data to generate actionable insights. These are then repurposed to cater to the unique needs of each customer, which in turn maximizes ROIs for the organizations.

    Relating to COVID-19, several brands have also pushed out contactless menus, which can be listed on TripAdvisor. By simply scanning the QR code on their mobile phones, customers are able to access restaurant menus without the fear of germs and virus spread.

    COVID-19 Behavioral Trends 

    Consumer patterns have also been changing as people are slowly adapting to the 'new normal', and these behaviors should be studied and understood for businesses to successfully cater to changing needs. 

    With more people staying home, new routines have been formed as people start getting used to working from home. While some skip dining out altogether with self-prepared meal options, others are skipping breakfast and lunch as they're no longer required to embark on a daily commute to work. 

    Food delivery options are also increasingly popular, with 54% of people using at least one restaurant delivery option since the start of COVID-19. That being said, a significant majority (63%) still prefer ordering directly from a restaurant. Brands will now have to engage with customers online, be it through social media, websites, or mobile applications, to leverage these trends. 

    Close to half of the customers are now relying on word of mouth to discover new eating hangouts, with brands capitalizing on this by incentivizing customers to post about their dining experiences online. 64% also wish to see restaurant staff prioritizing safety, either by wearing masks or PPE and while 49% appreciate having hand sanitizers provided at the table

    Furthermore, social distancing guidelines have proven to be advantageous to QSR businesses, with people likely to exercise caution while heading outdoors. Instead of heading towards casual-dining restaurants, they are likely to instead visit QSRs for their speed. QSRs who have rolled out digital ordering solutions stand at the forefront, as millennials had already begun to gravitate towards these brands prior to the pandemic. 

    Gen Z Behavioural Trends 

    With Gen Z having $143 billion worth of buying power in the United States alone, it is crucial that QSRs understand their buying patterns, to successfully cash in on this significant group in the population. 

    Prioritizing their reputation, Gen Zs are often pressured to make known their likes and dislikes by posting on social media, to emphasize that they are ahead of the trends. QSRs can cater to this behavior by creating unique products that are 'Instagram-worthy', in the hopes of going viral on social media. A successful example is Cha Cha Matcha in SoHo, Manhattan, where Cha Cha Matcha created dairy-free matcha lattes which could be ordered online, while also adapting food trends to the lattes (by adding Reishi mushroom), which increased their popularity. 

    QSRs will also have to embrace technology, to remain appealing in the eyes of Gen Zs, as they expect to receive information immediately through their smartphones, making orders online, and getting things done efficiently. This can be done through mobile app ordering or contactless payment, both of which would be well appreciated by this group. 

    Finally, Gen Z is also known for the highest rate of anxiety among other generations. QSRs can aim to create a stress-free and efficient purchase and payment process to win over these customers, be it through mobile applications or website orders which will minimize human interaction. 

    Digital Ordering

    To keep up with the increasing trend of online orders, it is necessary for QSRs to work on digital ordering. Let's take a look at how Chipotle utilized in-app purchases, Virtual Farmer's Market, and delivery which helped in creating a better customer experience. 

    In-App Purchases

    Chipotle first launched its mobile ordering application in 2009, allowing customers to do in-app purchases, store order preferences for convenience, and even place group orders under a single account. 

    In April 2020, Chipotle ran a campaign where they gave away mini TABASCO bottles with digital orders. As a part of their "Chipotle Together" movement, they also encouraged their followers to engage with their posts and tag friends to win entree codes which were given out daily. This was effective in driving social interaction and connections between friends.

    Virtual Farmer's Market

    The Chipotle Virtual Farmer's Market took flight in June 2020, where Chipotle's suppliers are now able to sell products directly to consumers, such as meat and cheese. By supporting the suppliers and developing each of their sites individually, they are able to provide a new revenue stream while at the same time staying true to their commitment to sustainable farming practices. It will also help in building the resilience of their suppliers, especially in these trying times.

    All ingredients used in Chipotle restaurants are also highlighted on the Virtual Farmer's Market homepage, allowing fans to quickly access the suppliers behind their favorite products. To increase awareness of these products, Chipotle Virtual Farmer's Market-inspired recipes will also be posted on Chipotle's own TikTok channel.

    Chipotle is also doing their part to help farmers by providing education, scholarships, grants and even contracts, and have contributed over $500,000 to date, to support them.

    Delivery

    In a bid to increase engagement for their delivery model, Chipotle has also introduced the new sports predictor challenge, where new matchups are posted weekly. Fans who accurately predict the winners are then rewarded with free burritos for a year. This encourages customers to place deliveries, as this will allow them to participate in the challenge. Chipotle is also offering free deliveries with a minimum order of $10. 

    Delivery trackers have also been put in place, allowing customers to track the drivers as soon as their orders are placed. By providing accurate and real-time information on deliveries, customers will have visibility on the progress of their orders, and the ability to make appropriate arrangements depending on the expected wait times. 

    Capitalizing on Drive-Thrus

    Drive-thrus are a great alternative as they encourage social distancing, and customers are still able to purchase their favorite meals with peace of mind. QSRs also benefit from additional orders despite the reductions in in-store seating capacities. 

    Chipotle has seen success in the implementation of drive-thrus, with 13% higher sales at their restaurants with drive-thrus, wittily dubbed as "Chipotlanes". These lanes will facilitate orders, as customers are able to immediately pick up food that has been ordered online, effectively reducing wait times. 

    They are currently working towards 60% of their new restaurants having drive-thrus, and are even willing to relocate their stores just to add the additional lanes to meet their goals. In line with this expansion, they are also aggressively hiring, receiving close to 700,000 applicants nationwide and 8,000 new hires to date. 

    Tapping on Social Media

    Finally, Chipotle is also leveraging social media to reach its target customers, to ensure that they remain relevant and ahead of the trends. In line with the launch of the Group Ordering feature on their mobile application, Chipotle created a #ChipotleSponsorUs challenge on TikTok. Families and friends can participate by showcasing why they should be sponsored, and 5 of the most creative groups will receive free burritos. This challenge was started as a clever response to many Chipotle fans asking to be sponsored by the brand on social media. 

    Chipotle Together was also hosted on Zoom, providing an opportunity for Chipotle fans to attend live sessions with celebrities. Not only did it elevate customer engagement and make the experience personal, but Chipotle also used it as a way to collect more information about their younger audience.

    To provide a more seamless ordering experience, they have also incorporated a feature that allows mobile ordering through Facebook messenger, which is widely used by their audience. Currently only specific to Canada, customers can make their orders by chatting with Pepper, Chipotle's resident Concierge Bot. They will then be able to customize orders, use natural language to describe their order, and even link orders to their Chipotle Rewards account to redeem rewards. Chipotle went a step further by providing tamper-evident package seals, which ensure that all food is securely packaged upon delivery. 

    The Chipotle application and website will also be supporting donations, allowing fans to give back by donating to organizations by rounding up their bill. 

    Chipotle's digital transformation is met with significant success, fueled by their willingness to understand their customers and ability to meet their demands. By keeping track of industry and customer behavior trends, Chipotle is able to tailor its strategies, be it in terms of digital ordering, drive-thrus, or social media to capture the attention of their audience. 

    Therefore, it is necessary that you, as a QSR owner, can relate to the customers, and incorporate strategies that will improve the customer experience and provide additional value. This will allow your business to leverage trends and behavioral changes brought about by COVID-19, and use them to your benefit.

    Ultimately, digitalization is an inevitable transformation process that all businesses should embrace sooner than later. One area that is often overlooked is the digitization of hiring, and how doing so can yield tremendous cost savings for your business. Top fast-food restaurants like McDonald’s and Chick-fil-A have been utilizing the Workstream platform to find the best employees at lightning speed. Curious to see how you can save up to $10,000 a year on hiring? Schedule a time to chat with our hiring specialists and we’ll show you how these restaurants are doing it!

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    Sng Kai Lin

    Kai Lin is a freelance writer and digital marketer well-versed in SEO. Apart from writing, she also seeks solace in traveling, photography and playing the piano.

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