This post is part of the Reporter's Notebook blog.
Will Chipotle Mexican Grill test drive-thru restaurants?
Analyst Mark Kalinowski of Nomura hopes the Denver-based chain at least considers it, based on a recent visit he made to Chipotle’s new Tasty Made burger concept in Lancaster, Ohio.
In a report Thursday, Kalinowski revealed some interesting tidbits about how Tasty Made has evolved since it opened in late October.
A second Tasty Made location is scheduled to open in mid-February, in Pickerington, Ohio, between Lancaster and downtown Columbus.
Here are three highlights from Kalinowski’s report:
1. Drive-thrus are a good thing. Tasty Made has the first drive-thru for Chipotle as a company, which has historically been against them, Kalinowski said. About 52 percent of Tasty Made’s business comes from customers who order from their car window, and that appears to be growing.
David Chrisman, director of Tasty Made operations, told Kalinowski that Chipotle’s management “may have had their eyes opened somewhat about the convenience a drive-thru can offer some types of customers (for example, a parent with multiple young children),” he wrote. “Apparently quite a few Tasty Made customers who are aware of the burger unit’s connection to Chipotle have been asking, ‘So, is Chipotle going to get a drive-thru?’”
2. Menu prices matter. Responsibly Raised meat? Maybe not so much. Tasty Made’s pricing has dropped substantially since the opening. The Double Tasty Made Cheeseburger, for example, is now $4.10, down from its original price of more than $6.
This move was the result of customer feedback. Customers said the original prices were too high. But it also means the restaurant is now serving conventional beef, rather than the humanely raised, antibiotic-free beef without added hormones, which the core Chipotle brand promises.
Kalinowski wrote that 90 percent of initial customers were unaware of the restaurant’s “Responsibly Raised” meat promise and/or didn’t care. The remainder who were aware still thought menu prices were too high, he wrote. So the restaurant switched to conventionally raised, never-frozen meat to reduce pricing.
But that may change, Kalinowski noted.
“It took time for brand Chipotle to move toward (for example) non-commodity pork, and similarly, it may take time for the Tasty Made to become established before it moves away from commodity beef,” he wrote.
3. There is opportunity between quick service and fast casual. Despite earlier indications, Tasty Made now leans more towards quick service than fast casual. With the drop in pricing, Tasty Made is considerably less expensive than a Five Guys restaurant about a mile away, Kalinowski said.
A single cheeseburger is $2.55 at Tasty Made, and fries are $1.95. At the nearby Five Guys, a cheeseburger is $7.69, and regular fries are $4.19.
Tasty Made has also rolled out combo meals, and staffers can walk the drive-thru line to take orders via iPad, a practice used by the more value-positioned In-N-Out Burger.
Based on the price, “Tasty Made is positioning itself to compete just as much (if not more so) with traditional fast food, as compared to the ‘better burger’ segment,” Kalinowski wrote. “More generally, Tasty Made provides an other example of how the lines between traditional quick-service and the fast-casual sector continue to blur.”