Chipotle struggles with speed as customers return to its restaurants

Chipotle says it has launched an operating program to improve speed and train workers in throughput./Photograph: Shutterstock.

Customers have started returning to Chipotle Mexican Grill restaurants much like they did before the pandemic, ditching the digital ordering they’ve relied on for more than two years in favor of simple counter ordering.

But now the company finds itself with an unusual problem: its employees aren’t quite used to all this in-store activity.

Executives at the Newport Beach, Calif.-based chain on Tuesday outlined a strategy to improve throughput at its restaurants. They argue it can drive bigger sales simply by teaching new employees how to run restaurants with lobbies full of customers.

“Our general managers and teams have adapted well to our growing digital business and the growth of our restaurant business,” CEO Brian Niccol told analysts on Tuesday. “However, customers were waiting for digital orders and the front line was moving. But it could have been faster. I know we can be better.

The company, he said, has launched an effort to retrain its employees on “the fundamentals of our business, including food preparation and preparation, improving order accuracy and throughput. in-store activities.

Niccol also said the company is rolling out a new workforce management tool to ensure workers are in the “right place at the right time.”

Chipotle has installed new PIN pads that enable contactless payment and has a new training program that includes “digitally enhanced” courses, videos and e-learning resources. It is updating its point-of-sale system and plans to invest in more technology such as Chippy, the company’s chip-making robot.

Chipotle executives hinted that the slowdown in service could be to blame for the slowdown in sales since mid-May. The chain, which operates more than 3,000 locations, said its same-store sales rose 10.1% in the quarter ended June 30. But they were on track for even better performance before this slowdown.

The company expects same-store sales to be mid to high in the third quarter, including a 4% wage increase scheduled for August.

“We have a lot of new people who are still learning, frankly, on the high throughput basics,” Niccol said. “That’s what our business is for. We have to have our strengths in places. You must have the sender. You must have linebacker. You cannot bypass these places and try to serve the business. We have a lot of people who don’t understand the importance of some of these roles.

It’s not just front-line workers either. General managers too. “A lot of these managers have been promoted in the last 18 to 24 months,” Niccol said. “So we know there’s a benefit to combining this new tool of the trade, deploying people properly, and then making sure those people are trained and actually experience what great throughput is.”

The issue highlights a challenge some restaurants face as consumers return to restaurants, but some of the digital demand remains. Many workers were trained during a period when restaurant activity was not so strong, so that they could focus more on serving digital customers. As more of this activity has shifted to traditional restaurant demand, it has slowed down some services.

Chipotle sees business shifting toward restaurants. In-restaurant sales rose 36% in the quarter, executives said.

The percentage of business that goes through digital controls has also slowed. Digital orders reached 39% in the second quarter. That figure was down from 42% in the first quarter and 50% during the pandemic. Delivery, on the other hand, represents a smaller percentage of the overall activity.

Transactions rose 3.5% to 4%, Chief Financial Officer Jack Hartung said. During this time, the average group size has decreased. As a result, Chipotle workers serve more customers who place smaller overall orders and offer a wider range of service options.

Company executives said they began focusing on operations in 2019 in an effort to improve throughput, and the effort was starting to pay off before COVID hit. They said improving speed inside restaurants remains a big opportunity. But it just requires getting some of those extra reps, they said.

“We have restaurants that make $6 million, $7 million” a year, Niccol said, citing a figure that’s more than double Chipotle’s average unit volume of $2.8 million.

” This team [in those restaurants] been together for years. And when all the COVID restrictions disappeared, they went back to managing Chipotles with great success. That’s why we’re so convinced that there are so many opportunities to recruit reps, train them in the basics, and simply let them experience the success they can have by following those basics.

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