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Working to restore brand loyalty is, apparently, not a quick fix. Chipotle is still experiencing fallout from an E. coli outbreak earlier this year that affected almost 60 people who ate at the massively popular burrito chain.
Following a temporary loyalty program launched during the summer (Chiptopia), Chipotle co-CEO Steve Ells was optimistic about the brand’s turnaround efforts. But, after the company’s Oct. 25 third-quarter financial results were announced, it’s clear that brand officials have a lot of work to do.
Consider the following numbers:
Third-quarter revenue sank nearly 15 percent, to $1.0 billion
Comparable restaurant transactions decreased 15.2 percent
Comparable restaurant sales decreased nearly 22 percent
Net income was $7.8 million, a decrease from $144.9 million for the same period last year
Ells, though, seemed upbeat.
“We continued to make steady progress in our sales recovery during the third quarter,” he said. “We are earning back our customers’ trust, and our research demonstrates that people are feeling better about our brand, and the quality of our food. While this year has been a year of reinvestment, we are now focused on continuing to further recover sales and improve our economic model to create long-term shareholder value.”
While Ells maintains optimism, some members of the Loyalty360 Association see a different picture at Chipotle.
“Clearly, Chipotle’s performance is not where they want it to be,” Jon Siegal, vice president and general manager for Stellar Loyalty, told Loyalty360. “At the same time, it’s unrealistic to think the problems they face can be turned around so quickly. Unfortunately, the Chiptopia loyalty program was announced in a way that made its long-term future uncertain since it was announced as a temporary program with no long-term commitment. Customers see through this and any short-term benefit they may have received was muted by the lack of long-term commitment. Chipotle has been a trailblazing brand, and we’re hoping to see them abandon the loyalty tactics and solutions of ‘yesterday’ in favor of something more brand appropriate.”
Chirpify CEO Chris Teso told Loyalty360 that “recovering from a food safety issue is not a short path to walk.”
Teso added: “Yet, it appears that Chipotle is dedicated to doing so and I’m heartened to hear that one of the ways it plans to attract and keep customers is through an intentional customer delight strategy. Delighting customers once in the door is only half the battle, however. It is important that Chipotle pairs its marketing efforts with engagement loyalty to actively surprise and delight customers when they aren’t in the store, thereby creating a positive brand connection that will encourage customers to return. A brand promise that involves delighting customers should be delivered across customer touch points – not just in the store.”
Meanwhile, Metia U.S. Director of Marketing Carrie McIlveen told Loyalty360 that consumers’ health concerns about Chipotle’s food may last much longer than expected.
“It will be important for Chipotle to stay the course and remain focused on improving its current offerings and food safety protocols,” McIlveen said. “It may also be critical to innovate, which may include new menu items, store concepts, advertising promotions, and customer loyalty programs. All which may help to progress its recovery, regain customers, improve traffic trends, and increase market share.”
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