Chipotle's tech rush could not have come at a better time
15:08

Chipotle's tech rush could not have come at a better time

Culture
Well in this pandemic, few industry sectors have been hit so hard, so tangibly as restaurants. It's a high touch business with a lot of high contact, people near each other in dining rooms. And it's a business that often runs on relatively slim sensitive profit margins. All of a sudden, they had to go take out or go home. But now, we look at reopening restaurants, the actual physical dining rooms As a packed dining room. Let's talk about one player that knows how to get this done as we ask Now What. [MUSIC] Curt Garner is the CTO of Chipotle Mexican Grill. We all call it Chipotle, about 2,600 restaurants around the US and a handful of other countries. Curt, let me ask you a you've been at Chipotle for about five years now. You came from Starbucks. You guys dove into digital and technological innovation in the last couple of years. Obviously unrelated to the pandemic. Support lays mission around providing real food. Well as we have looked at access, we have looked at recreating a restaurant experience that's turbocharged with digital. And for us that's been building dedicated digital kitchens in all of our restaurants that can serve orders that are coming digitally or from outside the restaurant A website and the crew member in the restaurant that's creating the food to provide that frictionless, fast, delicious, highly customizable experience without being in the restaurant standing in line. So for someone who hasn't been to a Chipotle or hasn't noticed this, what is this second kitchen look like? Where is it? It looks exactly like the front line in a chipotle that you might expect to see where all of the ingredients are freshly prepared and available for a crew member to make an entree. We have created a digital screen system that doesn't use text but uses images of the food items and the ingredients to help a crew member very quickly and accurately Prepare an order as it comes in. So you guys must have found at some point that seeing imagery of the order, is faster, and easier for that crew member to grok than reading a bunch of lines. Absolutely, it's also more accurate, so these these digital kitchens can work very quickly. With a high degree of accuracy and a highly customized level, the people in our restaurants in the front lines you know when you come in you can have a discussion and dialogue with the person that's making Certainly you know if you want to have that conversation where you ask somebody for a little bit less or a little bit more of an item, that's certainly an in restaurant experience. We also have a lot of menu items that are very gluten friendly Or friendly to people with celiac. And we have customers that come in that asked our crew members to change bugs, as they're making their order. Yeah. Yeah, that's something that you want to do in the restaurant instead of within that delivery kitchen, just to make sure we get that absolutely right. Okay, interesting, interesting. Now in chipola, his most recent quarterly results the big headline was an 81% jump in digital orders. Now as we go back to opening up restaurants, how much of that do you think is going to stick? How much of that is going to swing back to the dining room? It tells us a lot about where you guys think diners comfort level is with the way we used to do things. We're really excited that many of the customers that have been coming in over the last six or seven weeks through our digital channels are brand new to AAA 67% of people enrolling in our rewards program are brand new to AAA. So we're seeing a mixture of people coming in and discovering us for the first time and having the time to explore our menu and create something customized. As well as people that are frequent customers of [UNKNOWN] A, but I've never explored digital, that are now adding perhaps different occasions, and new occasions. So, I think as our restaurants, dining rooms re-open Certainly we're gonna see some people go back to the in restaurant dining experience. We do think that they'll probably think of us on the weekends if they'd historically just been a lunch customer at work as an example. And certainly we're expecting some of those customers that had their first Napoli experience digitally, to also start exploring us within the restaurant. So we don't really look at it as The percentage being the measure of success. For us it's all about are, we creating awareness and love of what it is we're doing in our purpose? And we're really excited about the role that digital is playing and doing that. So, when you guys set up and really doubled down on digital and mobile again a couple years ago or so is kind of what I perceived. Did you roll your own in house? Or did you find a lot of the technologies you needed were available out there from various technology vendors? No, it's both. There are certain things that we've bought and there's certain things that we build our strategy has been, the closer we are to a consumer experience, the more bespoke and custom we need to be The further away We are from a consumer experience, the more it makes sense to use something that's commodity technology or readily available. An example I would give you is payment processing. There's not a whole lot of value for AAA to write and create our own. Payment processing software. There's plenty of that available in the marketplace. And it's not a reason why somebody would choose to go or not go to AAA. But when it comes to the interaction that you'd have on an app or on our website. Something that needs to be very unique and very bespoke to our experience. And those are things we've created ourselves. How about that visual representation on the digital make line?. Did you guys have to kind of brew that or was that available on the market?. It was a partnership. It wasn't available on the market. There were some commodity technologies that we're able to leverage for that. We had to change it. Frankly, and extend it to be able to do the things that we wanna do. Some of our partners involved in that are now using what we help them create for other brands and experiences. Hmm. Which we think is great. So let's talk about Chipotle lanes. This is your trade name for your drive up lane. A lot of folks will say okay, just call it drive up guys. But what is it about a Chipotle lane that makes it different than just drive through or is it just a brand name for drive? A drive through has a speaker box But some, someplace where you queued to order intend to dwell for a couple of minutes or longer as an order is prepared, to pull lanes do not have that support. Lane is the ability for you to order in advance, either through our website or app and drive right up and have your food served directly through the window without any queuing or waiting. Okay, so the interface goes from being the speaker box to being typically mobile I would imagine. And you really focus on just a fast pickup. It were averaging 10 to 12 seconds. Wow. In terms of the time somebody spends in line. Because payments already done because I've been doing it in app and ordering is done because I did that in app Correct. Do you support walk up and bike up Is that allowed? We have a couple of restaurants that have that capability. And again, our strategy is all been about giving people the access that they need. And we're continuing to innovate in that space. Our pickup shells that you mentioned earlier are are part of that. Were We've provided access for people to just walk in the door and have a quick contactless experience within our restaurants. Certainly bike up, walk up fits within that. So I wanna talk about those pickup shelves if folks again, if you haven't been to AAA, you place your mobile order and to pick it up, you just go barely into the dining room. It's usually near the front, and there's a Simple rack of shelves and there's your order bag with a receipt stapled to it and your name is in big types, you can just grab it and go. This, of course, becomes interesting as we go into a reopening in a less confident era among consumers who were talking to some grocery industry folks yesterday who said, you know Some areas where you might have had a lot of touch at the counter and picked and chosen things they might end up being behind the counter or they might be sealed grab and go packages. What are you guys gonna do about the pickup shell for example, does that need to move behind the counter for a while or does it stay up front and self serve. All of our meals today are prepared and sealed containers. So if you get a bowl or a burrito, they're wrapped, or they're sealed. And then they're placed in bags that are then sealed, and then placed on the shelf. We had the shelving system before The situation that we're in now, with the pandemic, Yeah. Something extraordinarily popular with our customers, certainly also helps speed up delivery for our delivery aggregators. We expect to continue to have, Right, [CROSSTALK] yeah. Okay. We're excited about that. Just the speed and access that it's giving us. Okay, so you expect those to stay up front and be available? Yes. Tell me about the honor system. I'm always intrigued by that when I walk up and I see one of those orders sitting on the shelf there and I think well how many folks just come in and take an order? Especially in busy downtown urban areas where you've got a certain percentage of So we say non conforming characters or folks that maybe want to upgrade them? Or say hey, wow, this person orders something really good. Do you have Did you have a lot of a lot of unauthorized picking off the shelf? We do not. We do staff and monitor the shelves. We have security systems in place as well. It has not been a problem for us. And certainly as we continue to build more and more support lanes, those are places where a customer drives up and identifies themselves for the order, which hasn't been a problem, our customers have a lot of Out of honor. [LAUGH] Good customer to have. Anything else you want to tell us about what your office is working on as you guys are planning for re-opening? What's on the docket? You got a couple of months it looks like, maybe a month or so to really get plans to the point where perhaps things are starting to re-open shortly after that. What's on your list of things to get done? Well as it relates to reopening, we're going to follow the guidance of all the local communities that we serve the state governments and federal governments. We're really proud of all the food safety protocols and health protocols we already have in place. So We gonna follow the appropriate leads there as it relates to our digital transformation we continue to be really excited about the response we are seeing the whole of initiative that we pur it into play around access. We think we still ar the very beginning of what's possible and I'm listening very careful to The new customers that are coming in to digital as well as some of our more frequent customers that are making the move over. You know, I think for a long time, now people have been starting to understand the benefits of digital and technology as it relates to access to information and connecting with one another. That's certainly more true than ever now. It's really exciting for us. I imagine there's some interesting planning meetings between what your department's working on and the, I guess what I'd call the real estate side of the house that worries about physical footprint. Do you guys see a zero sum game or do you both grow or what's the roadmap there, especially in light now of the way the pandemic is shaking things up. It's a highly collaborative team at Chipotle. And we're really excited about all the people that have come into the brand in the last few years and the journey that we're on. And we've got 2600 locations in the US. We think there's an enormous runway for future growth here. We just have a couple of locations and international marketplaces. We think there's tremendous growth out there. Digital is gonna be just part of what the journey is around culinary experiences, around building brand awareness and affinity, continuing to grow our capabilities in our restaurants. You know all of that together I think is so exciting for us. Anything intresting on the remote workfront? Getting away from the actual frontline foodprep and delivery, anything you offices have been doing to allow the rest of the organization to operate from home during this shelter and place times. Being a restaurant company we've. Operated for years with a lot of remote workers, our real estate teams or field leadership teams are distributed all across the country. We're fortunate that we've made investments in collaboration technologies, and tools, and our teams. We're very used to using them, and working, and a remote. Capability or capacity before the pandemic. So our transition to shelter-in-place and work from home has been pretty seamless, in terms of people's ability to continue to support our teams and each other.

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