Chipotle To Expand Chorizo, Consider Loyalty Program To Bring In New And ‘Lapsed’ Customers

Image courtesy of Mike Mozart

Last year, Chipotle’s food-safety crisis led the burrito eatery’s business to plummet, with same-store sales plunging as low as 37% in December 2015. In 2016, though, there have been no reported outbreaks, and the company has been mailing and texting out coupons to draw old and new customers. The massive giveaways of food are now over, and the chain is moving on to new promotional methods, including buy one, get one free entrées and potentially a loyalty program.

Executives shared this information during the company’s quarterly earnings call, and they were the side helping to some dismal numbers. Customers have been returning to Chipotle, and a recent survey performed by stock analysts showed that customers who used the freebie coupons were more likely to return to the restaurant more often for meals that weren’t free. The company gave away a total of six million free burritos and burrito bowls to customers who texted in or received coupons in the mail. One million more customers cashed in coupons for free chips and guacamole or salsa.

Comparable restaurant sales weren’t as bad as they were during the worst of the food safety crisis, but they still weren’t great. Comparable restaurant sales fell 29.7%, but comparable restaurant transactions were only down 21.1%, since “transactions” also includes customers who were just there to cash in their freebies.

The company also plans to roll back some of the changes it made to help with food safety. Customers didn’t react well to lettuce that was pre-shredded in a central kitchen, so restaurants have returned to shredding lettuce and slicing bell peppers in-house.

Blanching fresh vegetables (dipping them in boiling water to sanitize them, then immediately into cold water) has been a helpful food safety precaution, and customers are actually complaining less about the steak now that it’s pre-cooked before being grilled.

The chain kept expanding, too, opening 58 new restaurants in the first three months of the year. They plan to open as many as 235 restaurants in calendar year 2016.

To keep customers coming back more often, the company plans what it calls a “limited-time frequency program” this summer, rewarding customers for stopping by often, and perhaps bringing back what the executives have come to call “lapsed” customers who haven’t been back recently.

The food safety crisis delayed expansion of chorizo, a chicken-pork spiced sausage that has been tested in Kansas City but hadn’t rolled out elsewhere. Expect to see chorizo elsewhere soon, though the executives didn’t specify where.

Chipotle Mexican Grill, Inc. Announces First Quarter 2016 Results [More Numbers]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.