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chipotle digital makeline.jpg Photo courtesy of Chipotle
Chipotle executives have noted the company is in "early innings" on its throughput execution as the company targets $4 million AUVs.

How Chipotle created a culture of throughput

As it targets $4 million AUVs, the restaurant company has added coaching tools, training and incentives to sharpen its focus on throughput.

Since we’re officially more than halfway through Q1 earnings reports, it’s fair game to derive some of the winners from the start of 2024. Unquestionably among them is Chipotle, which experienced a 7% increase in same-store sales driven in large part by a 5.4% increase in traffic.

To understand the secret of Chipotle’s momentum of late, it’s important to understand its sharpened focus on throughput. Indeed, the word “throughput” was mentioned 33 times during the company’s earnings call April 24. Unsurprisingly, several brands, from Cheesecake Factory to Starbucks to Portillo’s, have noted a more intentional prioritization of throughput, because why wouldn’t they want to emulate Chipotle’s recent success? That said, they all have some catching up to do to get on the same playing field as Chipotle.

Indeed, throughout the past two years, Chipotle has become so maniacally focused on this piece of the business that in Q2 2023, CEO Brian Niccol said the company was creating a “culture of throughput to build this organization.” Here’s how Chipotle has gone about creating such a culture.

In the second quarter of 2022, the company launched a “Project Square One” initiative aimed at retraining its crew on the fundamentals of the business after the entire industry was impacted by a historic labor shortage. Those fundamentals included having ingredients prepared and ready to serve, ensuring staffing is efficiently deployed during peak hours, and, yes, increasing throughout.

Chipotle rolled out a new labor management tool, installed customer-facing pin pads for faster payment options, deployed a new learning management system to train more effectively, and updated its point-of-sale hardware. The labor management tool in particular has had a big impact, as staffing models are wildly different at a Chipotlane versus traditional restaurant, and the tool enables employees to be at the right place at the right time based on where the peak traffic flow is coming from.

The company also then became focused on getting its employees more reps and “getting our people in the right places at the right time” to execute the maximum throughput in 15-minute increments. The company has used 2014 as its throughput benchmark, where orders were in the high 20s, low 30s on a 15-minute basis. Moving from 22 entrees to 27 entrees in 15 minutes yields big results; an added transaction equals one percent of comp for the day. Also in Q2 2022, Chipotle began testing Hyphen, which automates meal assembly on the digital makeline, underscoring that this idea of “throughput” isn’t fleeting.

During the next quarter, Q3 2022, Chipotle’s Project Square One was rolled out to the entire system, and the company reported that its highest volume restaurants were meaningfully outperforming lower volume restaurants, providing even more incentive to get the throughput piece right. Chipotle began to see some fruits of its throughput labor by Q4 2022 while also re-establishing “shoulder-to-shoulder training.”

“We have been eliminating the workarounds and reestablishing operational standards with Project Square One … This means ensuring all ingredients are in stock, that our teams are fully staffed and properly deployed during peak periods to drive throughput, that our food is prepped and cooked on time, that we are improving throughput on the frontline and improving on time and accuracy on the digital makeline,” Niccol said at the time. “Project Square One has helped to lay the foundations, including training in each of these areas.”

This is also about the time that Chipotle also began experiencing lower turnover rates, with 90% of its restaurants fully staffed. The improvement drove a nearly 10-point lift in digital on-time percentage. Shortly thereafter, in the beginning of 2023, Chipotle started to test changes to staffing deployment based on peak times.

“We have noticed that when the digital makeline gets busy, our managers tend to pull a crew member from the frontline to help, which is impacting throughput,” Niccol said at the time. “We are testing changes to the smarter pickup times based on different deployment levels and early results show we are increasing throughput on the frontline and increasing on time on the digital makeline without impacting sales.”

The company wrapped up its initial Project Square One work in Q2 2023 but embedded the program into its training curriculum, meaning crew members are now retrained on key components each quarter. Chipotle also began reemphasizing staffing deployment during peak periods in the second quarter, with a focus on the expediter role to alleviate bottlenecks.

Also during this quarter, Chipotle relaunched its “Cultivate University” for new field leaders. The three-day training program includes, you guessed it, a focus on throughput. Chipotle pressed the gas moving into the latter part of 2023, bringing back a coaching tool that was in place prior to the pandemic and adjusting the cadence of digital orders to better balance labor deployment. The company also made it a point to incentive throughput improvements.

“Throughput is a key performance factor in the crew member bonus plan,” Niccol said. “It is also a component of the bonus measure for general managers, field leaders, team directors and regional vice presidents. As we coach and make progress on throughput, they will enable more restaurants to achieve their quarterly bonus and drive a better overall experience for guests and our team.”

By the end of 2023, Chipotle began collecting data on the execution of throughput and providing feedback and coaching on a weekly basis. Niccol said this visibility “energizes and motivates” team members.

“Since we put these coaching tools in place, we have seen … an acceleration in our throughput performance,” he said, adding that the number of entrees served in its peak 15 minutes improved by a full point in Q4 2023 over Q4 2022.

Amid all this work – quarterly training, shoulder-to-shoulder training, makeline deployment adjustments, etc., Chipotle has also added new equipment at test locations to speed things up, including a new grill and a third pan rice cooker. Niccol has also made it a point to note that the company isn’t “capital constrained” in investing in things like automation to keep up its operational momentum. Hyphen, for instance, is expected to make its debut in a restaurant in the next year or so. Autocado, which automates the onions/jalapenos chopping process, is expected to cut guacamole prep time by 50% whenever it moves from test into restaurants.

All of this leads to where we are now and Chipotle’s strong results amid an otherwise challenged environment. The foundation to create a “throughput culture” is in place, but the work is far from over. The company is targeting $4 million in average unit volumes, from its current $3 million-plus, and throughput is what is going to get it there.

“We’re in the early innings … We’ve done a really good job executing against our pillars of great throughput … and we’re really excited about where we can go from here,” he said in April. “You’re going to hear us talking about throughput for a long time.”

Contact Alicia Kelso at [email protected]


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