Chipotle CEO: Don't underestimate the power of digital to boost sales

  • In the third quarter, digital sales grew 48.3 percent and now account for 11.2 of overall sales, the company said.
  • CEO Brian Niccol's goal is to remove friction in all aspects of the ordering and making process, so that food gets to customers faster.
  • Since joining Chipotle in March, Niccol has championed upgrades to the company's mobile app, its internal software and in-restaurant technology.
Chipotle Mexican Grill food catering.
Adam Jeffery | CNBC
Chipotle Mexican Grill food catering.

Chipotle Mexican Grill may be testing new menu items in limited markets across the U.S., but the company's CEO doesn't foresee it being the top driver part of its strategy to regain market share and boost sales.

While the company will continue to test a variety of items — nachos, avocado tostadas and bacon — and launch some limited time offers like chorizo, it plans to be more focused in other areas of the business like improving its digital capabilities.

"I don't think new menu news is the primary unlock," Brian Niccol, the head executive at Chipotle, said on an earnings conference call Thursday. "I think it plays a role. But I think the digital access, removing friction ... is a big unlock for the Chipotle business."

Inthe third quarter, digital sales grew 48.3 percent and now account for 11.2 of overall sales, the company said.

Niccol, who once held the top spot at Taco Bell, is known for encouraging creativity in the kitchen, but also for his push to make ordering easier for diners and employees. Since joining Chipotle in March, Niccol has championed upgrades to the company's mobile app, its internal software and in-restaurant technology.

His goal is to remove friction in all aspects of the ordering and making process, so that food gets to customers faster. This will come in handy as Chipotle increases its delivery capabilities. The company said that its current delivery time is under 30 minutes, but that it can do better.

To increase productivity, Chipotle has been updating its kitchens with a second-make line. These are buffets similar to the one at the front of the store, but are just intended for digital orders. At these stations, employees view a flat screen TV shows what ingredients need to go into each order. So far, there are 750 restaurants outfitted with this new line, with the plan to have all locations remodeled by the end of 2019.

The company is also rolling out digital order pick-up shelves, which are meant to prominently display online orders once they have been filled. These shelves are currently in 350 Chipotle locations, but Chipotle expects them to be in all restaurants by mid-2019.

Additionally, Chipotle is testing drive-up windows just for guests to pick up digital orders.

"It's clear that customers appreciate the added convenience, because these stores generate digital sales far above the national average," Niccol said.