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Chipotle's Turnaround Plan, Step 1: Give Away Free Food

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The burrito chain has quite a hole to dig itself out of this year.

B. Duss/Flickr

2015 will always be remembered as a tough year for Chipotle Mexican Grill, and if the company doesn't play its cards right, it could be remembered as the beginning of a downfall. But it's likely that Chipotle will bounce back after a public health crisis hit its locations from coast to coast. It's been 23 days since an incidence of E. coli infection has been connected to a Chipotle restaurant or employee, and if Chipotle can stay clean, it has time to dig itself out of this shallow grave.

So how does a company that largely skirts the rules of the fast food game win back the favor of its loyal fans? By giving away free food, apparently. According to CNBC Chipotle is betting that its most loyal fans will keep coming back and that it can win back those on the fence by offering freebies. This isn't a nationwide campaign like Chipotle's annual Halloween deal. Instead, locations have a budget for giving away free food to customers at a manager's discretion. As of this month, that budget has gone up. Though co-CEO Monty Moran wouldn't disclose the actual dollar amount that locations have, he said during an interview that the budget for each store has "doubled." It's unclear how management at each store will use this budget, but free birthday burritos sound nice.

So will giveaways help Chipotle earn back its place at the head of the fast-casual pack? Chipotle's stock price has dropped more than 40 percent in the past year, and the chain disclosed in December that same store sales were down by 30 percent year over year. Though many compared Chipotle's recent E. coli scare to the one Taco Bell faced in 2006, there are many differences between the two. Chiefly, Taco Bell was able to identify and isolate the source of the contamination within two weeks of starting an internal investigation. Chipotle's internal and contracted experts have not yet identified the source of this strain of E. coli, which is part of the reason why public opinion of the chain has fallen so far.

Eater Featured Video: A Chipotle explainer from our sister site Vox

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