Its free-delivery campaign helped digital sales soar during the early months of the COVID-19 pandemic, but Chipotle Mexican Grill (NYSE:CMG) fans shouldn't expect the deal to be a staple promotion moving forward.
On Wednesday the fast-casual giant revealed several positive results in its delivery channel, including rising customer satisfaction and reduced fulfillment times. These wins helped Chipotle gain market share during a brutal selling environment for most of the industry.
But the chain has noticed that shoppers are increasingly ordering ahead for pick-up, whether it's through the Chipotle app or by using partners like Uber Eats. That selling channel has been its fastest-growing niche since stores started reopening in recent weeks, and so the company is pouring cash toward extending its drive-thru service, which executives call "Chipotlanes."
Free delivery is also a drag on profitability, so the chain is eager to shift toward using its store base more as a pick-up fulfillment network than a hub for an army of delivery vehicles. "With free delivery promotions likely to be less frequent and us pivoting toward Chipotlanes," CEO Brian Niccol said in a conference call with investors, "we are optimistic that the order ahead transaction will continue to be a big driver of future growth which should benefit both sales and margins."