Analyst: Chipotle’s Customers Still Haven’t All Come Back

Burrito eatery Chipotle needs something very important to recover financially from its recent food safety crisis: it needs all of its customers to come back, and keep coming back. Since eradicating foodborne pathogens from its restaurants, Chipotle has tried offering everyone free burritos, buy-one-get-one promotions, and a
CNBC reports (warning: auto-play video at that link) that back in June, which would have been before the Chiptopia loyalty program began, a customer survey by Morgan Stanley showed that 25% of customers said that they’ve either stopped going to Chipotle, or still go but stop in less often. 13% of participants said that they will no longer go back to the restaurant, which is surprisingly close to the number of customers who said the same during the food-safety crisis.

That could be due to the food-safety crisis, or it could be simple menu fatigue, which the company is trying to fight by introducing new proteins to the menu.

Another survey released this week showed that while 20% of adults surveyed were “very worried” about the chain’s food safety in January, the figure had fallen to 13% this month. 26% of people surveyed said that they had not visited Chipotle since the worst of the outbreak.

“The sales recovery will remain more protracted than the market believes, and possibly more costly as a result, as [Chipotle] likely needs to ramp up marketing spend to lure consumers back in,” a Morgan Stanley analyst wrote. That’s bad news for Chipotle, since its massive burrito giveaways hurt the publicly traded company’s profits.

The loyalty program at least requires customers to spend money at Chipotle before they get free stuff, requiring customers to buy at least four entrées before they earn a free one, encouraging the habit of weekly visits to Chipotle.

The good news is that analysts have noted long lines at restaurants, which may indicate an uptick in sales due to the loyalty program, which began on July 1 and will last through September. Chipotle hasn’t ruled out making the program permanent.

Chipotle customers aren’t coming back anytime soon, according to brutal analyst report [CNBC] (Warning: auto-play video)

by Laura Northrup via Consumerist