Chipotle Mexican Grill has launched an operations initiative that aims to boost throughput by ensuring its mostly new workforce is “rush ready.”
Staffing has returned to 2019 levels, Chipotle CEO and chair Brian Niccol said Tuesday when reporting second-quarter earnings, and restaurants across the country have full mobile-order pickup shelves and lines out the door. Average unit volumes for the chain have reached $2.8 million.
Still, said Niccol, guests are waiting too long for digital orders and lines could be moving quicker. “I know we can do better,” he said.
Second-quarter same-store sales grew 10.1%, but Niccol said they would have been higher if not for a bit of slowdown during the latter half. Lower-income guests are coming in less often and a relatively new workforce is less able to perform well during peak times, he said.
Team members that have joined over the past few years don’t have the experience of running a busy restaurant with a growing “two-line business,” said Niccol, referring to the customer-facing front line and the back-of-the-house makeline dedicated to digital orders.
As dine-in guests return, digital sales have slipped. During the second quarter, digital orders represented 39% of sales, a dip from the prior quarter’s 42% and 49% in the quarter before that. Meanwhile, in-restaurant sales grew 36% during the second quarter.
That’s not entirely good news, as digital orders tend to be larger. Transactions were up 3.5% to 4% during the quarter, but because of the shift from digital to dine-in, group size dropped by about 4.5%.
Niccol said he would like to see restaurants return to in-restaurant throughput levels like in 2014, when the number of guests served in a 15-minute peak period reached the upper 20s to 30s.
“We’ve got to have our aces in places,” he said. “You have to have an expediter. You have to have a line backer. You can’t work around those things to try and service the business. And we have a lot of new people who don’t understand how important some of those roles are. As well as general managers — a lot of general managers have gotten promoted over these last 18 to 24 months.”
But a solution is in the works.
During the second quarter, Chipotle completed the rollout of a new Kronos scheduling tool that Niccol said helps “put the right people in the right place at the right time,” technology that he contends will improve productivity.
The company has been piloting the system for two years, so it’s not entirely new to management. But Jack Hartung, Chipotle’s chief financial officer, said it will take some time for all team members to be trained against it.
“It’s like learning to drive a Ferrari,” he said. “When you first get in the car, it’s a very, very highly sophisticated tool and we’re learning how to use that.”
Niccol noted other tech moves designed to strengthen worker execution of the basics, including the installation of customer pin pads to offer faster contact-free payment; a new management system for training that uses e-learning, video and digital resource materials; and an update of point-of-sale hardware.
In addition, the Newport Beach, Calif.-based chain is also testing an automated tortilla frying system dubbed “Chippy,” designed to free workers from a tedious task.
And Niccol hinted that it plans to explore an automated real-time kitchen production system. This week, Chipotle’s Cultivate Next venture fund invested in Hyphen, a company that designs automated makelines.
Niccol said some Chipotle units are doing up to $7 million in sales. What makes the most difference is workers with experience performing well during peak times. And, he noted, “what we’re really after is that better throughput actually results in a better employee experience.”
Fundamentally, Niccol said Chipotle needs its workers to be on top of their game as the 3,052-unit chain pushes to reach 7,000 units across North America, aiming to accelerate to about 10% unit growth annually. The company plans to open between 235 and 250 units in 2022, and about 80% will have Chipotlane drive-thrus.
Contact Lisa Jennings at [email protected]
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