Once upon a time, Chipotle sat at the top of the fast-casual food chain. It didn’t invent the segment, to be sure, but the burrito behemoth did help usher in a new style of dining, as well as a now-ubiquitous menu item: the burrito bowl. But what goes up must come down, and Chipotle’s downfall began in 2015 when scores of customers became sick from eating at locations in several states across the country. For a company that marketed itself as a healthier, more sustainable alternative to traditional fast-food this was an especially steep fall from grace.
Now, on the heels of one of the most widely-reported food safety scandals in recent years, Chipotle is primed for a comeback. Of course, it's had its distractions. In July, its chief marketing officer (the man largely in charge of the company's turnaround plan) was indicted on charges of cocaine possession. Later that month, the company confirmed rumors that it would soon be opening the first location of its new concept: Tasty Made, a burger, fries, and milkshake restaurant.
Below, a look at how the chain has been working to get back in the good graces of once-loyal customers.
1. Institute new food safety procedures
Among the new protocols implemented in the wake of the E. coli outbreak, Chipotle stores began having staff prep and marinate proteins like steak and chicken after prepping vegetables or other raw food. Additionally, Chipotle had staff in restaurant kitchens blanch some ingredients — avocados, citrus, onions— before they were used. Other ingredients, like lettuce, was cleaned and chopped in central kitchens rather than in individual stores.
Steak (which some believe may have been the source of the outbreak) is now cooked off-site before being shipped to stores, where it is marinated and reheated on the grill. Safer? Maybe, but many customers have voiced their opposition to the new preparations, saying the company is sacrificing flavor as a result.
In a recent earnings call, executives made it clear they were heeding those complaints, noting some preparations, the chopping of lettuce, for instance, had reverted back to in-store prep, and not off-site.
2. Give away free food
In January, individual stores handed out hundreds of coupons for free entrées, though freebies were distributed at the discretion of managers. Then, in early February, Chipotle gave out even more free food.
On February 8, all store locations closed for a few hours, while management held an all-staff food safety meeting. Customers who showed up to grab lunch that day were met with signs promising free burrito coupons via text.
Free food didn’t lead to lasting change, however. According to a report by location-based marketing firm xAd, foot traffic into Chipotle stores went up thanks to the promo, but dropped again once it was over.
3. Launch a new marketing campaign
In 2015, Chipotle was spending 1.6 percent of its sales revenue on marketing. This year the company is doubling down on marketing. In the first quarter of 2016 alone, executives planned to spend at least $50 million on marketing, promotion, and public relations efforts — a full 16 percent of Chipotle's first quarter revenues. Public relations messaging included a new website devoted to the company's newly-instituted food safety procedures, as well as a Super Bowl promotion, and a short film (above).
Chipotle is well-known for its viral, Pixar-style short films, which typically include modern covers of popular songs. Its latest, "A Love Story," debuted in July and told the story of a decades-long fast-food rivalry that eventually evolves into a love for "real food" — and, of course, true love.
4. Roll out a loyalty program
Chiptopia, the chain’s first-ever loyalty program, debuted July 1 and lasts until the end of September. The rules are a little confusing but customers who participate and frequent the chain often are rewarded with free food, merchandise and (if they visit nearly every other day this summer) catering for 20 people.
The program was initially successful in wooing back once-loyal customers, though executives have noted that its popularity has tapered off since it first launched. CEO Steve Ells has said that Chipotle will likely replace the program with something more permanent once it ends at the end of the summer.
5. Launch a new menu item
Chipotle’s simple, straightforward menu has hardly changed in the company’s 23-year history. The simplicity has historically been part of the chain’s success, but analysts have expressed concerns that customers are suffering from menu fatigue. Executives hope to combat that with a new meat option: chorizo, which is now on the menu at select locations and will be rolled out nationwide this fall.
According to CEO Ells, chorizo accounts for six to seven percent of entrée sales in restaurants where it is available but some financial analysts have expressed concerns that it isn't necessarily luring new customers. In a recent report, Morgan Stanley analysts wrote that "it's unclear how much incremental traffic [chorizo] is driving vs giving the loyal user base another reason to remain engaged."
6. Debut a transparency campaign
A recent Morgan Stanley report noted that Chiptopia (the aforementioned loyalty program) "has had the desired effect of driving loyal users to resume their prior frequency, but doesn't speak to the other approximately 75 percent of customers that are less frequent."
Those less frequent customers, say analysts, are less concerned with food safety, but are experimenting with other brands as well as eating at home more often. Chipotle’s plan to woo them back? A transparency campaign, set to launch in the fourth quarter.
Chipotle recently filed to trademark three phrases, which will likely play some sort of role in the transparency campaign: "Cutting Additives, Not Corners"; "The Nature of Taste"; and "Additives, Subtracted."
It will take another year or so before Chipotle will know if these six tactics will successfully lure wary consumers back into its burrito-filled locations. Until then analysts and fans are watching its every move with interest.
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