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Gen Z e-Commerce Opps: Chipotle focuses on digital personalization, delivery

Following its successful "Behind the Foil" campaign in Chipotle plans to drive sales by driving culture, which includes showcasing its "real" ingredients. The currently active "For Real" TV campaign pushes Chipotle's culinary and personal characteristics by featuring its workers. Chipotle also targets specific "cohorts both on purchase frequency as well as, I would call it, lifestyle" as part of its personalization efforts; however, since these announcements released through Chipotle's Q4 2019 earnings call in February 2020, the company has started to face a bigger issue: how to convince its consumers that it's taking all precautions to keep consumers and employees safe.

Most recently, Chipotle launched paid social ads toting "free delivery" at any location in March 2020 to get the attention of more Gen Z and millennial eaters during the pandemic; it also, of course, continues to promote its carry-out option. Personally, as embarrassed as I am to admit this, I clicked on one of the free delivery paid social ads and was mistakenly required to pick up the order in-store, so hopefully that glitch was figured out. It's fine. I'll be fine. Probably my fault. Chipotle's "always-on social and digital program" may increase spend as a result of the pandemic, which means we should see more paid social ads for the foreseeable future.

Chipotle has a financial advantage as a national franchise, at least in states that haven't undergone a temporary lockdown for nonessential businesses; for example, NY temporarily ceased all non-essential business operations, so Chipotle might not see as much action there. Sellers and agencies alike will want to stick to more "essential" businesses in NY for the time being.

FY 2019 marketing expenses remained at 3% of sales, flat with the year before. Since Q4 2019 sales reached $1.4 billion, an increase of 17.6% from Q4 2018, Chipotle should have increased the amount spent on marketing last year. We can't say for certain how the company's profits may fluctuate as a result of the closure of inside eating areas at most US restaurants, but its increased digital efforts will support delivery and e-Commerce orders.

According to

In FY 2019, Chipotle spent approximately $68.1 million on national TV ads, per iSpot. In 2018, it spent approximately $37.2 million on TV. From March 1 2020 to the date of this article's publication, it spent about $5 million. This is technically less than the ~$6.5 million it spent from March 1 - 24 in 2019, but it started spending more consistently this month. We may see it stretch out spending dollars more this year than it had in years previous.

Sellers -- Target male Gen Z and millennial Instagram users with paid social, and remember that Chipotle uses TikTok as well. Also target these consumers with digital display, TV, OOH and radio space. Kantar measured more OOH ad spend than radio in 2019. We may see the company shift an increased amount of dollars toward targeted digital display and spread TV dollars more evenly throughout its usual H1 and Q4 spending periods.

Agency readers -- Deloitte Digital handles digital. Since profits increased significantly YOY as a result of Chipotle's latest marketing efforts, we would normally not think a review may happen in the near future, but keep an eye on Chipotle as it continues to battle the obstacles currently placed on the restaurant industry.