The COVID-19 pandemic has been a catalyst for introducing digital distribution platforms for the food chain Chipotle Mexican Grill Inc. (CMG). The spread of new kinds of restaurants has also been accelerated by new customer preferences.
Chipotle Mexican Grill was able to rebuild rapidly after the first phase of the pandemic, when restaurants could only function for take-out or delivery, since it already had the infrastructure to execute online orders. Later, when the restaurants reopened, it turned out that about half of the customers of Chipotle Mexican Grill would continue to buy items online, even though they collect them on their own. The pandemic, in other words, has developed a customer habit. The situation was considered by Chipotle Mexican Grill to be a good chance for a new operation.
New kinds of facilities, so-called digital restaurants, have recently been opened by Chipotle Mexican Grill. There is no traditional counter for ordering and seating in such restaurants. Here, customers can only pick up an order made directly via the Chipotle Mexican Grill app or food distribution services from third parties. These restaurants can be opened on a relatively small scale in urban areas and in rural areas, and will remain cost-effective even with an average load, as staff and rent expenditures are smaller. That is, Chipotle Mexican Grill will work in more places in the long run than previously believed, with the latest type of restaurant. This is a prime example of how innovations can be used by a business to maximize profits.
For restaurants, digital purchases are also advantageous because of the potential to get more knowledge about their clients, which would eventually lead to better service.
The COVID-19 pandemic was also the beginning of a significant transition for Chipotle, which could lead to the establishment of a radically new business model in the long term.
Chipotle Mexican Grill Inc. (CMG) stock was up 1.98% at $1,334.62 on Friday while its year to date gain was +59.43% at close of the bell on the day.