Chipotle Smartens Rewards With Personalized Perks to Prevent Inflationary Trade-Down

With inflation-concerned consumers minding their restaurant spending, Chipotle is getting smarter with its rewards.

The fast-casual giant, which has nearly 3,200 locations across five countries, on a call with analysts Tuesday (Feb. 7) discussing its fourth-quarter 2022 financial results, shared how its investment in its loyalty program are paying off.

“In 2022, we increased our rewards members by 20% to 31.6 million,” Chipotle CEO Brian Niccol said. “Our program continues to get more sophisticated as we better understand who our members are and serve them with relevant content, targeted offers and gamified badging to help drive transactions. In 2022, 60% of our rewards program promotions were personalized, and we plan to increase this going forward to drive engagement and enroll new members.”

These kinds of targeted offers can help mitigate the effects of consumers’ inflation-related belt-tightening. Research from the December edition of PYMNTS’ Restaurant Digital Divide study, “The 2022 Restaurant Digital Divide: Restaurant Customers React To Rising Costs, Declining Service,” which drew from a survey of a census-balanced panel of more than 2,300 consumers, found that, across generations, the vast majority of consumers have made adjustments to their restaurant spending in response to rising prices.

Eighty-eight percent of millennials and Generation Z consumers, 87% of bridge millennials and 85% of Generation X consumers reported making such changes. Plus, the most common change for diners to make in response to economic challenges is cutting back on the frequency with which they purchase from restaurants.

Indeed, the company’s delivery sales have taken a hit as consumers have reevaluated their spending.

“Delivery transactions in the fourth quarter declined 15%,” CFO Jack Hartung said. “I think there’s probably some people who are deciding that, while that channel adds a lot of convenience, there’s a there’s a higher price that comes with that.”

Additionally, the brand has been focused on increasing its drive-thru presence. Of the 100 restaurants opened in the quarter, 90 featured the brand’s Chipotlane mobile order drive-thru option. Similarly, over the course of the year, 202 of the 236 restaurants did so. In 2023, the company plans to include these drive-thru lanes at 80% of new restaurants.

In an interview with PYMNTS late last year, Chipotle’s chief development officer Tabassum Zalotrawala described how the fast-casual brand is expanding the reach of its mobile drive-thru lanes by removing some of the key elements that typically define the channel.

“While we refer to Chipotlanes as the digital drive-thru of the future, a pickup lane is a more accurate description,” Zalotrawala said. “Unlike traditional drive-thrus, Chipotlanes do not have a speaker box, menu board, excessive signage or a large stack of cars waiting to order and get their food. … The differentiation is important in jurisdictions that prohibit drive-thrus.”

This method has also enabled the brand to extend the model to areas it otherwise may not have been able to reach. Zalotrawala noted that the company, having argued for this pickup/drive-thru distinction, has been able to “successfully introduce” the concept into “some cities that typically do not permit standard drive-thrus.”

Research from the 2022 Restaurant Friction Index, which drew from a census-balanced survey of more than 2,100 U.S. consumers, found that 35% of diners said they would be more inclined to purchase from restaurants that offer drive-thru pickup.