ARCHIVES: This is legacy content from before Industry Dive acquired Mobile Commerce Daily in early 2017. Some information, such as publication dates, may not have migrated over. Check out our topic page for the latest mobile commerce news.

Chipotle fires up mobile-ordering focus to boost stagnant sales

While Chipotle Mexican Grill was one of the first quick service restaurant chains to implement mobile ordering, the brand’s stagnant third quarter is prompting it to debut more enhancements to the platform, as well as an online catering service, in a bid to further optimize the experience and boost sales next year.

Chipotle’s mobile and online ordering capabilities account for five percent of sales, a significant increase from the previous year, although the brand admits the rollout of paying for menu items on smartphones was deliberately under-advertised. The chain’s stock price dropped by 8 percent this week following a wobbly quarter, but end-of-year sales can likely experience an uptick if it places a heavier focus on marketing the mobile ordering option.

“To better market its mobile ordering service, Chipotle could create local search campaigns for each of its individual restaurants,” said Sebastien Provencher, vice president of product management at Acquisio. “In addition, by using ad scheduling (the equivalent of day parting in search), the ads could appear only in the morning, when people start searching for lunch options.”

Boosting sales with mobile
Chipotle’s chief financial officer reported this week that the restaurant marketer has not been accelerating or decelerating in sales; rather, it has been staying level with previous numbers. However, as the fast food sector grows more digitized and consequently more competitive, Chipotle should look toward to mobile in an effort to bolster sales and surpass similar brands.

The chain experienced a 2.6 percent increase in same-store sales this quarter, as opposed to a 19.8 percent uptick one year ago. Peak lunch hour sales also fell incrementally, by one transaction.

To combat the lackluster results, Chipotle is refocusing on its mobile and online ordering platforms, which have experienced a 40 percent lift in sales from the previous year, although still comprising just five percent of total revenue.

The quality and convenience of consumers’ experiences will be enhanced, as the brand admits it has not quite optimized the process in its restaurants as much as it would have liked. Only seven percent of orders stem from customers outside the restaurant, meaning there is much opportunity for targeting and growth.

Chipotle is planning to revamp its second make line in kitchens to better facilitate out-of-restaurant orders. The second make line responds to mobile and online orders.

“The most important thing Chipotle needs to focus on regarding the mobile ordering experience is UI/UX and ease of use,” said James Connelly, CEO of Fetch. “This is critical, especially in QSR, where customers expect things to happen right away and without delay.

“Once feedback is positive then efforts should be taken to gamify the ordering experience. Exclusive promotions could be pushed through to customers to entice them to order with the app.”

Additionally, the chain is developing an online ordering platform for catering, which may see the brand team up with another third-party delivery service.

In September, Chipotle took the mobile ordering blitz one step further by identifying a potentially lucrative target audience of college students, prompting the brand to team up with the Tapingo application for quick mobile delivery to campuses nationwide (see story). It also has a long-standing partnership with the Postmates app.

Mobile gaming success
Last July, Chipotle brought an educational twist to a mobile-optimized game and sweepstakes that enabled entrants to receive a buy one, get one free offer redeemable only on smartphones (see story).

Consumers were able to visit a dedicated microsite to play the Friend or Faux game, which asked users to select a Chipotle menu product and another fast food menu item before comparing and matching 20 ingredients by pinpointing which item contained each ingredient.

This week, the fast food marketer announced that the six-week promotion resulted in two million buy one, get one free offers redeemed. The game also saw 750,000 consumers play it within the first launch day, with 7.5 million total views spanning the duration of the campaign.

These significant results suggest that mobile games, especially ones with an educational element, are well-suited to quick service brands and could be leveraged to introduce new menu items to a wider audience.

“The success of the Friend or Faux game at Chipotle is clearly related to two main elements,” Acquisio’s Mr. Provencher said. “First, it’s grounded in the brand’s core value proposition (great wholesome food elements) and it reinforces it by comparing those food elements (the ‘friends’) with other fast food chains’ ‘suspect’ ingredients (the ‘faux’).

“Second, we can’t underestimate the power of the BOGO (buy one, get one) offer that came with the original campaign. Everyone likes a free meal.”

Final Take
Alex Samuely, staff writer on Mobile Commerce Daily, New York