Can Shorter Wait Times Benefit An Ailing Chipotle Mexican Grill ?
Recently, Chipotle Mexican Grill (NYSE: CMG) announced that it had completed the roll out of its “Smarter Pickup Times” technology to all its restaurants that offer digital ordering. This technology allows the company to process more digital orders without disrupting service at its restaurants and benefits customers by offering shorter and more accurate pickup times. Customers can also reserve a future pickup time with this technology. While this technology should allow the company to serve its customers better and more efficiently manage high volumes during peak times, Chipotle is struggling to grow traffic at its stores. A better digital ordering platform is one of the company’s key strategies to grow revenues in 2017. While company’s such as Starbucks are facing operational challenges to handle the high traffic created due to mobile ordering, Chipotle appears to be ahead of the curve in building an efficient platform. However whether an efficient service will help the company to rebuild its lost reputation due to the e. coli food virus remains to be seen.
See Our Complete Analysis For Chipotle Mexican Grill
Mobile Ordering A Key Trend In The Quick Service Restaurants Industry
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According to Business Insider Intelligence, mobile ordering of fast food is expected to be a $38 billion market by 2020. Consumers spend more on fast food when they order via online rather than the phone. Research suggests that the average pizza order is 18% greater online than on the phone. Chipotle is looking to capture this trend by making its mobile ordering system efficient and effective. It is also running a marketing campaign to drive digital orders that includes in-store promotions, social media advertising, and digital advertising. Going forward the company is looking to link its digital advertising directly to digital ordering. While faster and more efficient service can attract customers, Chipotle still faces the challenge of assuring customers of its food quality. However, if these digital initiatives can increase the number of people visiting the restaurants there can be an upside to our price estimate.
Chipotle is banking on digital initiatives as one of the key pillars to drive revenues this year. While this is promising and companies such as Starbucks are facing problems of congestion due to heavy ordering via the mobile platform (and Chipotle has just released a solution for this), the company’s reputation loss due to the food virus remains a concern to drive growth. Whether this efficient platform will attract customers or not will be visible in the coming quarters.
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