Chipotle Says It Has Built a Profitable Delivery Business

Chipotle’s integrated partnership with DoorDash and the extra investment in building out in-store delivery efficiencies has been paying off well for the chain. Plus, it doesn’t hurt that burritos are the perfect delivery food

Many restaurant operators are concerned about the negative impacts of working with third-party delivery services, from low profit margins to a sub-par customer experience with delivered food.

Chipotle, however, wants to be clear: delivery is a growing and highly profitable business for the chain.

Delivery sales increased roughly 13 times over in the fourth quarter of 2018 compared to sales generated in the channel for the fourth quarter of 2017. Chipotle CEO Brian Niccol connected the sales bump in large part to the free delivery bowl promotion that Chipotle ran from December 17 to January 7. Nearly half of Chipotle customers who cashed in on the deal were new or lapsed diners, according to the company, and there continued to be a lift in delivery sales after the promotion ended.

Delivery costs more for the customer, generating a higher starting profit margin for the restaurants. A barbacoa burrito bowl starts at $9.95 in Chipotle’s Manhattan locations. The same order, selected for delivery on Chipotle’s own website, starts at $13.94, not including tax and tip. As long as delivery order volumes stay as high as they are, and are simply adding on to in-store order revenue, it’s a good business for the chain.

more

Leave a comment

Your email address will not be published. Required fields are marked *