Chipotle Taps Targeted Upselling as Restaurants Compete to Personalize the Experience

Chipotle Mexican Grill is targeting its messaging based on digital data from its loyalty members, as across the restaurant industry, leading players are competing to offer the most personalized experience.

The fast-casual giant, which has more than 3,400 locations across five countries, on a call with analysts discussing its fourth quarter and full year 2023 financial results, reported Tuesday (Feb. 6) that it is leveraging the insights gleaned from its digital loyalty program to more effectively boost customer engagement.

“We recently rolled out suggestive upsell on our app at checkout based on data we have on our Rewards members, including prior order history,” CEO Brian Niccol said.

“Going forward, I believe we are in a multiyear path to commercializing our customer data and insights into more targeted marketing campaigns and improving the overall digital experience that will drive increased frequency and spend over time.”

Consumers, for their part, are open to targeted messaging. The PYMNTS Intelligence report “Personalized Offers Are Powerful — but Too Often Off-Base,” which drew on responses from more than 2,500 U.S. consumers, revealed that 71% have received personalized offers and are interested in them, and another 12% have not received personalized offers but are interested.

Chipotle is certainly not the only major restaurant chain targeting this opportunity. On an earnings call last week, Starbucks CEO Laxman Narasimhan spoke to the quick-service restaurant (QSR) behemoth’s efforts in this space.

“In the U.S., we implemented targeted offers aimed at bringing our occasional customers into our loyalty program,” Narasimhan said. “We activated new capabilities within our propriety Deep Brew data analytics and AI [artificial intelligence] tool to identify and incentivize specific rewards members cohorts.”

McDonald’s, too, is going after the digital personalization opportunity.

“As we continue to attract millions of new loyalty members, we can get even smarter with our pricing methodology and tailor our digital offers to our fans, making them even more personalized,” the QSR giant’s president and CEO Chris Kempczinski told analysts on an earnings call Monday (Feb. 5).

Notably, Chipotle’s digital mix actually fell slightly in the quarter, despite this increase in its targeted messaging. Digital sales accounted for 36.1% in Q4 and 37.4% for the full year 2023. These figures mark a slight decline from 37.4% and 39.4%, respectively, a year earlier.

Still, restaurant customers are engaging digitally across brands. Research from PYMNTS Intelligence’s study “Consumer Interest in an Everyday App,” which drew on insights from a survey of more than 3,300 consumers in the United States and Australia, found that 1 in 4 U.S. restaurant customers exclusively orders food using internet-connected devices. Plus, another 36% do so both via traditional channels (in person or by calling) and via internet-connected devices.

In response to intensifying competition, Chipotle Mexican Grill is leveraging data from its digital loyalty program to enhance customer engagement, both in terms of purchase frequency and per-purchase spending. While the brand’s digital mix saw a slight decline, consumer interest in digital ordering remains high, indicating significant opportunities for personalized messaging.