Chipotle To Close Up To 65 Locations, But Plans To Goose Digital Sales

Chipotle, which recently announced plans to move its HQ from Denver to SoCal, is closing as many as 65 underperforming stores as part of a turnaround strategy that will also include a strong focus on boosting the chain's digital sales. 

The turnaround is being orchestrated by the new sheriff in town, Chipotle CEO Brian Niccol, who joined the company three months ago from Taco Bell. He discussed efforts to turn the brand around in a special conference call Wednesday. 

Part of the turnaround initiative will include "digitizing and modernizing" the restaurant experience, according to Niccol, who described the company's efforts to improve its ordering app. One example involves a simple but effective change.

"While the app experience that was rolled out late last year was best in class, in many of our restaurants, it was unclear to our customers where to pick up that order," Niccol said.

"In our Downtown Denver restaurant, we cut a window in the wall near the register and put a digit pickup sign above it," Niccol said. That simple change caused a double-digit increase in our [online] sales in the first few weeks ... this is a big opportunity across all of our restaurants."

Niccol also said that the restaurant needs to move customers through its lines more quickly, and will be deploying technology to facilitate that. "We will transform into a learning organization that ... constantly iterates to achieve our core objectives," he said.

Other aspects of the turnaround strategy involve cutting layers from the corporate structure and a redirection of marketing dollars, Niccol said.

"There was a lack of discipline around priorities, process and accountability... and skills gaps in many areas, and insufficient data for decision-making that held us back," Niccol said.

Chipotle sales have more or less recovered from the beating they took in 2016 in the wake of its food-poisoning incident, but recent growth has nevertheless been lackluster.