Is Your Next Burrito an Emoji Away?
Soon a burrito emoji will trigger an order at some restaurant, it is Chipotle’s job to make sure it is theirs.
Customer Value Proposition: It Is Not Just About the Burrito
Chipotle Mexican Grill, a popular quick-service restaurant (“QSR”), was founded to “show that food served fast didn’t have to be a “fast-food” experience.”[1] Core to delivering on this customer promise is Chipotle’s speed of service, quality of service and customization (build your own dish).
So how does Chipotle deliver on this? Digital ordering, digital payments and data-driven, technology enhanced operational efficiencies.
Chipotle’s Technology Innovations
The demand for digital ordering is high among Millennials with 39% of consumers already ordering on their phone and 56% wanting to.[2] Chipotle’s digital initiatives to date were plagued by customer complaints of long wait times, the inability to pay through the service and incorrect orders. In an effort to fix this, Chipotle has revamped its app, launched a mobile-optimized website and started installing tablets in its restaurants. They also have incorporated the ability to pay when ordering.[3] Not only does this make the customer experience better, as they do not have to wait in the cash register line, it is also very timely as credit card companies roll out their Chip and Pin technology.[4] This technology is a disruption at checkout that increases throughput time (an issue for Chipotle who promises speed) and therefore Chipotle wants to take payment away from the register.
Previously, Chipotle’s second make-lines to accommodate digital orders were using printed out receipts, with ingredients written in abbreviations, for the server to use to build the burrito. While this may work for a fixed menu, the variability of customized orders was causing mistakes and slowing down operations. Now, Chipotle is utilizing over-head queuing systems that use visual aids to highlight ingredients. Not only has this reduced throughput time and error, the visual aids are so intuitive it will reduce training costs.[5]
Chipotle has also invested in a new POS system that, coupled with the technology in the back-of-the-house, is now able to track demand and supply to accurately predict wait times, an initiative they have labeled Smart Pickup Time, and ultimately deliver on their fast service by minimizing wait times.
What’s Next?
A lot of these initiatives are long overdue. A QSR competitor, Panera, launched a similar initiative back in 2014. To remain competitive, they need to continue to look forward.
Near-Term: Integration with Messaging & Audio Platforms
Chipotle needs to make digital ordering even more accessible. Domino’s (a QSR competitor) “Anywhere” initiative empowers customers to order through any preferred medium, even by tweeting a pizza emoji.[6] Two areas of focus should be messenger and audio. As apps flood smartphones, consumers are starting to demand a single interface to access services without having to navigate platforms. This trend is most evident by the race between tech giants to win this interface: Apple’s iMessage, Facebook’s Messenger, Slack and Amazon’s Echo. The rise of the artificial intelligence technology referred to as “bots” allows the consumer to use natural language to ask for something and then, through APIs, the bot is able to communicate with the service.[7] In a race to scale, these platforms have partnered with service companies such as Dominos[8] and Chipotle needs to integrate to continue reaching its customers. This will be critical to reaching full utilization of the second make-line, or 50% of restaurant sales, especially given today digital sales only account for 6%.
Medium-Term: In-House Delivery Capabilities
While Chipotle has launched delivery via third-party services such as Postmates, I think they need to bring this in-house. Not only do you have other QSRs making this investment, you also have entrepreneurs starting technology companies focused on optimizing delivery speed through AI technology and outsourcing the menu creation to famous chefs, i.e. Maple.[9] To me, this suggests the commodization of the meal itself, with the value being how fast you can get it to the consumer. While building out a delivery fleet can be expensive, the emergence of the on-demand economy has created more supply lowering costs.[10] In addition, if drone delivery remains on track for 2020[11] it could bring the cost down even further.
Long-Term: Robot Labor
A startup Momentum Machines is launching a restaurant concept based on a robot that can make 400 burgers an hour.[12] As this technology becomes more accessible to the market this could increase speed of service and be a big cost savings for Chipotle, particularly on its second-make line, where the human element does not add any customer service enhancement such as helping the customer decide what to put in their burrito bowl.
Conclusion
Chipotle is currently faced with the reality that the QSR space is acting quickly as new competition pours in from Silicon Valley. If Chipotle does not adapt, its delicious burrito will not be enough to deliver customer value any more. Soon a burrito emoji will trigger an order at some restaurant, it’s Chipotle’s job to make sure it is theirs.
Word Count: 800 (excluding titles)
[1] http://chipotle.com/company
[2] http://www.oracle.com/us/dm/millennial-report-proof51523-2980210.pdf&elqTrack=true
[3] Chipotle 3rd Quarter Earnings Call
[4] http://www.wsj.com/articles/more-chip-card-headaches-this-time-for-merchants-1462613582
[5] Chipotle 3rd Quarter Earnings Call
[6] https://techcrunch.com/2016/04/06/dominos-now-lets-you-order-pizza-just-by-launching-an-app-no-clicking-required/
[7] https://medium.com/chris-messina/2016-will-be-the-year-of-conversational-commerce-1586e85e3991#.1nceabeba
[8] https://techcrunch.com/2016/04/12/agents-on-messenger/ & http://www.businessinsider.com/you-can-now-order-dominos-pizza-through-a-chatbot-on-facebook-messenger-2016-9
[9] http://www.forbes.com/sites/katherynthayer/2016/07/01/how-food-delivery-startup-maple-moves-fast-by-starting-from-scratch/#3d7325bf1458
[10] https://www.wired.com/2016/03/no-demand-economy-isnt-implode/
[11] http://www.forbes.com/sites/frankbi/2015/03/02/two-thirds-of-u-s-consumers-expect-drone-delivery-within-the-next-five-years/#1e09dc0c791d
[12] http://www.eater.com/2016/7/1/12077990/robot-burgers-san-francisco-momentum-machines
The idea of combining emojis and burritos is literally making me hungry. That said, I don’t think I want my burrito to be made by a machine. Having worked in the food service industry, I know what a struggle it is for employees to keep utensils clean, food changed out (for health reasons) on an appropriate schedule, and the work space clean (to prevent germ and pest infestation). When I picture the future of Chipotle as you’ve presented it, my hunger turns to queasiness (or disinterest at best). All that said, if Chipotle can do for burritos what Keurig did for coffee…… you’ll have my attention!
Great article! In today’s world of one-stop-shop (and pay) apps, QSRs are in such an interesting race against themselves to digitize customer-facing and back-end platforms. I was blown away by the Visa Checkout / Pizza Hut partnership announcement at a mobile tradeshow last spring – you can now pull up Pizza Hut menu on your car dashboard, put in an order (while keeping both hands on the steering wheel), pay using your Visa card, and get a notification when your order’s ready for pick-up. Crazy! I’d be curious how quickly QSRs develop APIs and integrate with various layers of digitization like artificial intelligence and voice recognition (e.g. Echo Alexa, Siri) or even connected cars.
http://www.businesswire.com/news/home/20150302006046/en/Visa-Pizza-Hut-Accenture-Develop-Connected-Car
Great article! With current Chipotle stores reaching a mature state and new sales growth only being reached through new store openings, I think Chipotle’s first problem is to win back consumers from the recent outbreaks of E. coli and norovirus scare. I know Chipotle plans to release a 10 episode Snapchat show called “School of Guac” to see if it is worth creating more online content on other digital platforms such as Instagram Stories [1]. My issue with this is that their director-digital marketing Jackson Jeyanayagam has just left to join a startup, Boxed [2]. How does Chipotle look forward to a new digital strategy to have the burrito emoji equate to their burritos when they appear to have internal tension? Do you think the Snapchat show will bring millennials back to Chipotle and to digital ordering platforms to order their burritos?
[1] Yuyu Chen, “’School of Guac’: Chipotle courts millennials with a Snapchat show,” DigiDay, October 13, 2016, http://digiday.com/brands/tune-snapchat-chipotle-courts-millennials-new-tv-segment/,accessed November 2016.
[2] Lindsay Stein, “Chipotle Digital Marketing Lead Jackson Jeyanayagam Joins Boxed as CMO
,” Ad Age, November 02, 2016, http://adage.com/article/cmo-strategy/chipotle-digital-marketing-Jeyanayagam-lead-joins-boxed-cmo/306571/,accessed November 2016.
Addison, great article and thank you for the insights on how digital technology is changing the world both for the QSRs as well as the individuals who consume their products. I think you identified a particularly interesting dynamic in your discussion of the competition not only between QSRs, but between the platforms (i.e. Slack, Facebook, iMessage, etc) that will ferry these orders to the restaurants. I too wonder about the automation of food preparation and wonder in particular if machines are used to prepare food, how QSRs will minimize errors given that a machine error can result in dozens or hundreds of faulty orders.
Fascinating read. Reminds me of a project I worked on at Red Bull where teams using Slack could send their co-workers a Red Bull via a custom emoji on the platform. We worked with a developer called GrowBot that keeps track of how many times team members give each other props or kudos on the app and consolidates it into a leaderboard for managers to review on a weekly basis. Managers could then send a Red Bull that would be delivered by postmates to the office. Like you mentioned in your article, delivery for us is the greatest challenge. Even though we have an entire fleet of Wings Team members who help with sampling, it’s not efficient for their time to help with one-off trips to office buildings which is why we decided to work with postmates to handle the delivery.
I can see why there would be demand for more efficient ways to purchase a burrito, especially in light of the terribly slow Chip machines used at POS. I like that Chipotle is implementing a new POS system to help predict customer wait times. This tool will help them make smart staffing decisions based on historical trends which may result in lower labor costs. I also like the idea of a burrito delivery service. Though customers may not be used to ordering burritos via delivery, I trust that Chipotle can be one of the first to enter the market and make it a worth while investment. While Chipotle can market to hype up customers to create demand upon initial launch, I’m not convinced that this will be a sustainable business model. Chipotle would have to have a separate production line to deliver to new customers, otherwise current wait time will increase if the cooks at existing stores have to make extra burritos for shipment. Without creating new delivery centers, this concept may actually hurt them deliver on their customer promise. I think Starbucks is experimenting with a similar delivery model. But people drink coffee every day, which is not the case for eating burritos. To make this a viable model, each branch may need to deliver to a large geographic area to aggregate order demand.
Nice post Addison!
I think that speeding up consumer’s time in the burrito lines makes sense for the future of Chipotle and other fast casual restaurants. However, I do wonder how important it is for the customer to actually see the ingredients put into their product. I think some people do like making the game-time decision at these types of restaurants. More pressing in my mind are the food safety issues that Chipotle has experienced in the past. If you order a burrito online, in the end all you can see is a rolled up cylindrical tortilla, which in my mind spells ‘Mystery.’ Does Chipotle have the brand equity today to prepare people’s food behind the scenes?
As someone who has done mass Chipotle orders for a team of people, I was interested to read more about the “second line” and how it’s not always efficient or error free. Hearing that orders are fulfilled based on receipts with abbreviated ingredients explains a lot about some of the mistakes I’ve seen over the years! I agree that this is a space that could be optimized and that digital technology is the way to do it.
At first, I had Alex’s same concern about safety issues and how Chipotle may want to keep a low profile as it recovers from the PR nightmare. But the more I think about it, I think a truly differentiating breakthrough like “burrito emoji ordering” could help Chipotle recover its image and distract consumers from the E. coli woes of the past.
Very interesting article, Alison. I agree with you that Chipotle should consider its delivery capabilities and that customers are putting more emphasis on how quick they can get their burritos delivered. However, I’m not sure whether the additional investment in delivery fleet is justifiable given the nature of Chipotle’s QSR business model. I have recently learned that Chipotle actually offers delivery via third-party services. I think it would be great if Chipotle puts more efforts in marketing its delivery options. In addition, I would recommend that Chipotle tries launching a pilot program first to gauge whether investing in its own delivery fleet is economically feasible.
Great article. The one part I had serious doubts on was on the delivery capabilities that Chipotle should try to develop. Like Piriya, I’m not sure there’s a lot of added value in vertically integrating the physical delivery component of the transaction because I don’t think there’s much value add for Chipotle. Part of the reason that delivery networks work is that when they’re large enough, the scale and network effects reduce the unit costs significantly, and it’s typically easier to achieve this by working with other food delivery networks that also use the same platform. Additionally, the idea of delivering food via drones seems a bit far fetched at the moment. It’s probably in the future, but the idea of receiving a burrito via drone is a hard one to swallow. Especially if I’m in my 30th floor office in Manhattan.