Chipotle Is Tired of Being Behind on Digital Strategy

“Chipotle’s new CEO Brain Niccol pulled no punches when he sat down for his first earnings call in April and candidly described Chipotle as an invisible brand. “This brand needs to be leading culture, not reacting to it,” Niccol said at the time.

In day-to-day operations, that’s led to a significant shift in the way that the company thinks about growth. Niccol said that he encourages more of a “test-and-see approach” on new initiatives under his watch, and in practice, the team has been freed up to move much more quickly on making decisions and testing new innovations. Niccol himself practices what he preaches — three months after he officially started as CEO, Niccol announced that Chipotle would be relocating its headquarters from Denver to southern California and closing down the New York City office.”

Read more here.

Shake Shack Sees Same-Store Sales Dip

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Shake Shack, once the darling of better-burger brands, continues to show signs of struggle in the sector as it reported a same-store sales decline this week.

Comps decreased 0.7% for the quarter ended Sept. 26, while total revenue rose 26.5% and sales increased 27.2%.
Shake Shack stock prices tumbled more than 11% on the news early Friday.
During the quarter, Shake Shack opened seven company-operated stores and two licensed units.

The brand expects to launch its largest number of new stores in history in 2019, with plans to open 36 to 40 units, executives said during a call with analysts Thursday.
The company drew concern from investors following its announcement in August that it was suffering from a logjam in unit expansion, stalling growth until the later part of 2018.

Read more here.

Evolution of the Fine-Fast Casual Enterprise

The restaurant industry has gone through a dynamic shift in dining habits.  Guests spend their money differently and seek to be more enagaged in their food experience. This change has incubated a class of restaurants—the fine-fast casual segment—which is, as we all know, fully blossoming.

With this, we are now also starting to see differences in service styles within the segment – We have highlighted 2 standard bearers to this and a new model that we call the Cafe-Table.

1) Assembly Line

Chipotle popularized this and made the envy of every restauranteur.  Guests enter the enterprise, get in line, and are engaged by a string of team members who assemble the order in front of the guest before ending at the cashier.   Countless enterprises have come to market as the “Chipotle of” their category by substituting pizza or Indian cuisine or salad for burritos.  And for good reason: this is the simplest, most efficient, and low-cost model.  Because the majority of the food is prepared ahead and assembled to order, labor is streamlined, and the delivery time is kept low, as guests are spending the majority of their wait in line to begin the process.  

However, the model does have some drawbacks; namely, there is little room for hospitality and it inherently feels more transactional.  Guests feel pressure from the line behind them and are shuffled from one team member to the next, making it nearly impossible to build any rapport.  But for moving people through the enterprise, nothing is faster.

2) Counter Only

Starbucks, Shake Shack, Panera—many of the major players are using this format.  It’s a model almost as old as the restaurant itself: guests place their order at the register, wait for it to be prepared, and are called back to the counter when it’s ready.  

The added benefit here is twofold: a sense of freshness and service.  While guests do notice the increased ticket time more, it also elevates the sense of occasion, which in turn increases average check.  Because the food is prepared to order, though, labor tends to be slightly higher.  

3) Cafe-Table

Lastly, what we are seeing become more and more popular as quick-casual eats up more of the full-service segment is this slight hybrid, counter service with a runner, the Cafe-Table Model.  For decades, cafes have utilized the system wherein guests place their order at the register, take a number, and identify their seat with that number for the service staff to deliver to when the food is prepared.  

As the market has become saturated with the aforementioned models, more and more operators are looking to differentiate and elevate their fine casual enterprise.  This is often how they’re achieving that.  Bringing the food to the table doesn’t add much in labor cost, but the guest experience changes dramatically.  Additionally, with team members in the dining room to run and clear, table turns can actually speed up in comparison to the Counter Only model.  This does require a more skilled team member—someone capable of reading a dining room, clearing tables, and interacting with guests.  

We anticipate this trend increasing as food and labor costs rise.  As third-wave coffee shops, bakery-cafes, and the like cope with the Fight for $15, they will need to either increase check averages or foot traffic.  Elevating the guest experience is a chance to improve from within your four walls.  If you’re considering this service format, do keep in mind that it also requires a compelling menu and strong kitchen to match.  Read about our most recent experience with the format in this month’s Retail Spotlight here.