Chipotle is copying Starbucks with its new strategy to boost sales
- Chipotle is rolling out a new rewards program in three test markets, with plans to expand the program across the United States in 2019.
- Chipotle Rewards represents a larger effort from the chain to use technology to grow sales.
- The rewards program takes a page out of Starbucks' playbook. The coffee chain has been relying on its digital loyalty program to boost sales and collect data on customers for years.
Chipotle is rolling out a new rewards program in hopes of boosting sales.
On Monday, the fast-casual chain announced it is rolling out a new loyalty program - Chipotle Rewards - in three test markets: Phoenix, Arizona; Kansas City (both in Missouri and Kansas); and Columbus, Ohio. Chipotle Rewards will launch nationally in 2019.
The rewards program is similar to that of other chains, such as Starbucks and Chick-fil-A, that award a certain number of points for each dollar spent. Members can earn 10 points for every $1 spent, with customers cashing in for a free entrée when they reach 1,250 points.
Chipotle Rewards represents a larger effort from the burrito chain to better use technology to grow sales. Chipotle has continued to struggle to rebuild sales to the levels it saw prior to its E. coli outbreak nearly three years ago.
In April, Chipotle launched a partnership with DoorDash. The chain has been pushing for customers to download its app with incentives such as free guacamole and tweaking the format of stores to better fit the needs of customers picking up mobile orders. Chipotle is even testing drive-thrus exclusively for mobile order at a handful of locations.
"Chipotle Rewards is a critical part of our efforts to digitize and modernize the restaurant experience," Curt Garner, chief digital and information officer at Chipotle, said in a statement.
While rewards programs have an obvious benefit of building customer loyalty, the increasingly digital nature of the programs gives chains even more reasons to encourage people to sign up, as it allows companies to gather more data on customers.
In a statement, Chipotle said that the rewards program "also includes a highly sophisticated, hyper personalized CRM program running behind the scenes which allows for targeted communication to drive trial, menu exploration and brand affinity."
Starbucks has been an industry pioneer in digital rewards programs. While sales overall at the company have flattened in recent years, mobile orders remain a bright spot. In addition to helping drive mobile sales, Starbucks' rewards program gives the company a chance to gather data and push personalized deals to customers - a strategy Chipotle now seems eager to imitate.