It was a year ago next week that the national Chipotle food safety crisis began on Halloween, when the chain shut down restaurants in Washington state and in Oregon after reports of E. coli infection in some customers. Things haven’t been going well for the chain since then, with sales plummeting, then slowly recovering with free food promotions and a loyalty program. The chain’s sales still haven’t fully recovered, but Chipotle hopes to coax customers back with some dessert.
This graph makes it very clear when the food safety crisis happened, and also that sales haven’t recovered yet. Compared to the same period a year ago, from July 1 to Sept. 30, 2016, total revenue is down 14.8%, and comparable restaurant revenue is down 21.9%.
Menu enhancements: Executives didn’t spill any of the ideas they have for this, but did mention the success of the addition of chorizo to Chipotle menus. The company doesn’t plan to get into a cycle of constantly introducing new items like traditional fast food outlets. One interesting proposal? Dessert, which the chain doesn’t currently serve.
Technology: Most of the tech-related plans involve the second burrito-assembly line out of the public’s view in the kitchen. The chain plans changes to how it handles orders coming from the web, from the mobile app, and from a mobile site that doesn’t require customers to download an app.
It also plans to add in-store ordering kiosks, similar to the ones recently introduced at Panera Bread restaurants, letting customers put together their orders on a touchscreen and avoid human interaction. Catering orders will also come in through an online system rather than over the phone or by fax.
Orders from all of these sources, including catering orders, will be assembled at that second line in the back using a heads-up display rather than receipt-sized order slips.
During today’s conference call with analysts, investors, and journalists, the company’s top executives noted that the Chiptopia rewards program was successful, and 75,000 of the top winners will be serving a catered party to their friends, advertising for Chipotle along the way.
Now the company’s promotion is a game, combined with television and print ads Ad campaign about food safety was “well-received,” but didn’t necessarily bring customers back.
On the business side, executives pledged to save $100 million in recurring annual costs, but supposedly in areas that would have no effect on customers: things like “disciplined staffing,” or making sure that restaurants are never over-staffed, negotiating with suppliers, reducing food waste, and using a new less expensive design for new restaurants. .
Yes, new restaurants: Chipotle still plans to open between 195 and 200 restaurants in the coming year.
Chipotle Mexican Grill, Inc. Announces Third Quarter 2016 Results [BusinessWire]
by Laura Northrup via Consumerist
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