Will free burritos bring back Chipotle's customers?
In an effort to win back a once-loyal customer base, Chipotle announced the launch of its Chiptopia Summer Rewards program on Monday. The launch comes in the wake of the restaurant chain experiencing a slew of food contamination problems over the past year or so, after which it hurriedly introduced a slate of safety standards.
Chipotle’s problems began in summer 2015, when five customers reportedly fell ill with E. coli. Soon after, public heath officials reported over 200 Chipotle customers in southern California with norovirus. In September, 64 customers in Minnesota reportedly became sickened with salmonella from bad tomatoes, according to authorities.
Chief executive Steve Ells soon promised to introduce new, more stringent safety standards to the company. “This was a very unfortunate incident and I'm deeply sorry that this happened, but the procedures we're putting in place today are so above industry norms that we are going to be the safest place to eat,” he said during an interview with NBC in December.
Chipotle’s hardships continued through the start of 2016 as customers began to file lawsuits against the company and a federal grand jury subpoenaed Chipotle in a criminal investigation into the southern California norovirus incident.
Chipotle closed all 2,000 of its US stores temporarily for a few hours on Feb. 8 to thank employees for sticking with the company through troubled times and to thoroughly examine new safety standards being implemented. The company instituted stricter measures regarding shelf-life testing and produce testing, even hiring industry professionals to serve as food safety consultants. However, in early March, Chipotle stocks fell 3.4 percent in a single day when a Massachusetts employee reportedly contracted norovirus.
The Monitor’s Olivia Lowenberg reported in January that Chipotle would not be implementing a marketing campaign to gain back the trust of consumers as the safety issues were being handled. After Chipotle’s brief shutdown in February, the company distributed millions of free burrito coupons in February and March both by app and snail mail. Chipotle’s latest venture is a full-on rewards program lasting July through September.
The Chiptopia Summer Rewards program has three status levels: mild, medium, and hot. At the lowest level, mild, a customer that buys four burritos, or other entrees, in one month will receive one free burrito. For the medium level, a customer will receive two free burritos for buying eight burritos in a month, and to be considered a “hot” customer, one would need to buy 11 burritos in one month.
Though the rewards program may lure back once-loyal Chipotle customers, some analysts are skeptical that Chipotle is targeting the right consumers. Tushar Parashar, marketing strategist at Vivaldi Partners Group, told Reuters, “People who are seriously loyal are easy to win over.” But for infrequent customers, Parashar says, “A free burrito is not enough to get you to come back.”
Chipotle recognizes the road to recovery is long and will take more than a promotions program to restore faith in the restaurant chain. After instituting multiple new safety standards and offering free burritos which will lower profit intake, Chipotle executives still don’t expect a full recovery for traffic or profit until at least 2017, according to Business Insider.
