Is there a burrito barrier?
Chipotle manages to keep growing sales rapidly, in part due to its ability to push the limits of burrito velocity. For example, the company obsesses about its “four pillars of throughput,” and allows managers see exactly how they rank against other stores in terms of transaction throughput.
Customers—and investors—might marvel at the speed during the lunchtime rush (top restaurants manage more than 50 transactions during the peak lunch hour). But if things seem somewhat slower at dinnertime, it’s because they are.
Part of slowdown at the dinner hour is likely related to the fact that Chipotle’s staffing levels decline at a time of day that’s less popular. (Or at least has less of the frenzied feel of the peak lunch hour.) But interestingly, the company seems to be hinting that the organizational discipline that helps Chipotle churn out burritos at warp speed at lunch doesn’t work as well at dinner. And there’s a very simple reason why: Kids.
On Chipotle’s post-earnings conference call earlier this week, co-CEO Montgomery Moran had this to say.
Our ability to achieve higher throughput is enormous, but it depends on a few things. I mean obviously, it depends on having plenty of customers coming through our doors, and it also depends on the type of customer, and also depends on whether it’s lunch or dinner. Because at dinner, people – here tend to be more children and more group orders, which take longer to put through and larger size transactions as well, which take longer to ring in.
Moran doesn’t go into exactly why children and group orders take longer, but it’s not hard to imagine the reasons. Compared to individuals on their lunch break with half an hour to get back to the office, hungry kids are less likely to line up and give their orders in orderly, decisive fashion. Their orders are likely to be filtered through an adult, and none too efficiently.
Now, this isn’t a huge issue for Chipotle at the moment, as the business remains heavily focused on lunch. But it could become one if Chipotle begins to face serious constraints to the lunch-rush-centric business model.