The customer uses a mobile app to confirm their food order in a dedicated drive-thru lane.
On October 25, 2022, Chipotle announced third quarter results for 2022. Total sales rose 13.7% in what many would consider a challenging year. Here is a direct quote from the press release. “Our performance in the third quarter confirms that our brand and value proposition remain strong, even in a challenging economic environment,” said Brian Niccol, chairman and CEO of Chipotle. “As consumer spending decreases, we’re focused on running great restaurants and delivering great customer and employee experiences.” The release, truly one of the last bullet points marked, reads: Of the 43 new restaurants that opened in the quarter, 38 locations had a Chipotlane. What is a Chipotlane? It just might be the future of how fast casual restaurants work.
Chipotlanes are Chipotle restaurants with drive-thru lanes designed to boost online/digital ordering. The Chipotlane has no menu. It’s a drive-thru digital order pick-up lane where diners who order and pay in advance arrive and get their food quickly. Restricting Chipotlanes to digital order pick-up only slows down the process of a traditional drive-up order lane. Does it work? Oh yeah. Based on one article by QSR, continue to open new Chipotlanes with sales 20 percent higher than traditional formats. They’re operating at 200 basis points higher margin at the restaurant level. And as of November 2002, there are now more than 500 Chipotlanes operating. Why is this important?
Because Chipotle might just change the way an entire industry treats its customers and delivers its food. The fact that Chipotle has evolved its restaurant design in recent years only broadens this conversation. The brand just opened a digital store in November in Highland Falls, New York (no in-store order). There’s also a Chipotlane-only restaurant with no dining room coming to Ohio later this year. What does this mean for the competition or for anyone considering starting a fast-casual restaurant startup? That you might be able to re-imagine the entire business model and layout of a restaurant.
Future restaurants may not have a customer-facing store, just a solid brand, good food, and great delivery. Virtual restaurants technically allow anyone to create and grow a restaurant brand without the cost and hassle of a restaurant location. Here are some of the characteristics a restaurant of the future could embody.
Mobile ordering. No restaurant of the future will be able to survive without online/app ordering. The difference then is the user experience and the pick-up/delivery experience. Which could also mean that almost all marketing will shift online and invade social media further.
Food delivery/pickup. Chipotle proves the alignment with their business model with the rise of their Chipotlanes. The competition or a start-up will have to embrace that most food orders are not placed at customers’ premises. Customer service and delivery become a critical part of the value proposition.
Place. Place. Place. If you place the majority of your food orders online in the future, where exactly should your physical restaurant be? Well, it can be anything and everything. Is it a mobile kitchen? Does it have a small hidden footprint somewhere near your customers? Does it look like a small nondescript warehouse or is it housed in a 45 foot trailer?
Just a kitchen. If the customer experience of the future comes down to the user experience of ordering online and having it delivered or picked up quickly, then businesses in this space need to rethink their physical layout. How does your mindset change if all you need is a good kitchen and an order pick-up process?
Smaller footprint. As the fast-causal restaurant market becomes more competitive, you can only raise the price of your food so much. At that point, it becomes a race to see who can lower their costs the most without compromising the quality of the actual food. Smaller may be better.
More efficient. If Chipotle is right about their order-only/takeout strategy, and Chipotlanes are appearing at almost all Chipotles, how many employees would you need to run an order-only restaurant (in the cloud)? Probably a lot less than most restaurants have these days. And in a smaller facility, the rent and associated costs will also be lower.
Hard to believe you could build a restaurant brand without having a physical building site. But the rise of the next generation of fast causal restaurants could do just that. Hidden from view but with great food, an ordering process that’s great and simple, and either food delivery or convenient takeout, this could be the restaurant business model of the future.
