Chipotle's New Drive-Thru Lanes Are Making An Impact On Sales
The coronavirus pandemic funneled more business than ever into the drive-thru lanes of fast food and fast casual restaurant chains. But what was once a necessity as indoor dining areas were shuttered, is now shaping up as a long-term trend. It's no secret that drive-thrus are at the forefront of new technology in the restaurant industry. As Restaurant Business reports, restaurant chains are using drive-thru lanes to test everything from automation to artificial intelligence. Customers seem to be on board with this new technology, at least according to a recent survey. Which perhaps explains why, according to Realtor Magazine, drive-thru-equipped properties are currently at a premium in the world of commercial real estate, and are drawing rents up to 20% higher than non-equipped properties.
Restaurant chains are obviously viewing this aspect of the business as significantly impactful in terms of profit margins. Chipotle Mexican Grill has proven as much with the announcement of its second quarter performance. Per a press release via PR Newswire, the fast casual restaurant chain reported a robust 17% increase in revenue (to $2.2 billion dollars). Not coincidentally, Chipotle noted that of the 42 new locations opened during the period ending on June 30, 32 of them (or 76.19%) were equipped with a "Chipotlane," the restaurant's trademark drive-thru format. The press release noted that Chipotlane's convenience and enhances the guest experience as well as its positive effect on restaurants' sales and profit margins.
Chipotlanes are driving Chipotle's growth strategy
In the four years since the Chipotle chain debuted its first drive-thrus in 2018, the number of Chipotlanes have increased exponentially, per The Motley Fool, to the point there are now several hundred nationwide. This is not an accident, but rather a focus of the company's strategy. It is one noted by Tabassum Zalotrawala, the company's chief development officer in December 2021 on the occasion of the first Chipotlane Digital Kitchen, which opened in Cuyahoga Falls, Ohio without an indoor dining area. "Chipotlanes are a key growth strategy for the brand," Zalotrawala said via a press release. "Our portfolio of approximately 300 Chipotlanes perform with the highest margins across the board, so we continue to evolve our restaurant design with formats such as the Chipotlane Digital Kitchen to best suit our growing digital business."
When something is generating the highest margins across the board, expect more — a lot more. Brian Niccol, Chipotle's CEO, announced on a recent earnings call that the number of Chipotlanes had increased to 430 by the end of the second quarter. (via Seeking Alpha) That's a massive increase since the end of 2021, and the reason becomes obvious when it's noted, per the company press release, that restaurants with Chipotlanes are averaging 15% higher sales. Niccol added via Seeking Alpha that the company is targeting real estate to increase the restaurant portfolio by up to 10% each year, with at least 80% of these new restaurants featuring Chipotlanes.