It’s been nearly a year since Chipotle’s E. coli/Norovirus/Salmonella crisis became one of the most widely reported food safety scandals in recent memory. Now, the company is doubling down on its recovery plan — testing new menu items (including desserts), investing in digital enhancements, and making the decision to cut investment in growing ShopHouse Asian Kitchen, the company’s Asian-inspired concept.
Below, the biggest insights gleaned from Chipotle’s Tuesday earnings call with investors:
• Chipotle desserts are on the horizon. And maybe some other new menu items, too.
Chipotle has been notoriously slow in adding new menu items (the menu remains largely unchanged since its debut in 1993), but that might be changing. According to founder Steve Ells, the chain is "actively exploring ways to offer new additions to the menu, which are a good way to entice infrequent or lapsed customers to return."
Chorizo, which hit stores nationwide earlier this month, already accounts for roughly 7 percent of chain's sales across the country. Expect to hear a lot more about it in the future: Chipotle plans to increase advertising surrounding chorizo roughly 400 percent.
According to Ells, the company is now testing two new desserts, though he didn’t elaborate. Executives said the company is still in the process of evaluating which dessert will be rolled out nationwide. They added that the company is "close to fulfilling" the demand for a better tortilla, one without preservatives or additives.
When asked to elaborate on how much the chain plans to alter its menu in the future, Ells said, "I’m not saying that we won't add breakfast [one day]," but added that the chain would continue to focus on its core menu items.
• The restaurants are getting a new look.
Chipotle is currently testing a new restaurant design, which includes improvements in seating, customer flow, and presentation of the kitchen. It’s also more cost-effective, at about $760,000 per store (approximately $40,000 less than current design).
According to marketing officer Mark Crumpacker, the new design is already open in certain locations and under construction in others. The chain plans to open somewhere between 195 and 210 restaurants in 2017.
Chipotle has also digitally enhancing its back-of-house "make line" (i.e. the kitchen area where digital orders are fulfilled) in some of its highest-volume stores. In the outposts where it has been tested, the new design has resulted in faster orders, more consistent portion sizes, and fewer mistakes.
• A new, digital, way to order Chipotle is coming — but it’s unclear exactly what it is.
Explaining the chain plans to make ordering and paying for Chipotle easier and faster, Crumpacker said the company would soon unveil a "beautiful and intuitive way" to order burritos. The interesting part? It will require no app download, with executives calling it a "responsive online ordering website." More details, they said, should be announced in just a matter of days.
According to Ells, Chipotle will also soon unveil a tablet-based app which allows customers to order their food in the restaurant, without waiting in line. In those cases, the food will be made in the back of house. "Nearly all of our restaurants have a second ‘make’ line where we fulfill digital, fax, and catering orders," said Ells. That make line will, he hopes, be much busier in the future. Digital orders currently account for just 6 percent of all orders.
The company has also been testing smarter pickup times, a technology that presents customers with ETAs based on current demand in the store. Chipotle will roll out smarter pickup times nationwide in January, which one executive said would give stores the potential "to create one entree per minute."
• Chipotle will no longer invest in growing its Asian-inspired concept, ShopHouse.
Saying the brand has not "demonstrated the ability" to show meaningful growth, Ells revealed the company has "decided not to invest further in growing the ShopHouse brand." Chipotle will, however, invest in other concepts, such as Pizzeria Locale and Tasty Made, a forthcoming fast-casual burger restaurant.
Expressing confidence that Chipotle’s "approach to food, people, and unit economics," can prove profitable "with the right cuisine," Ells said pizza and burgers both have "broad customer appeal" and require relatively small capital investment.
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