Chipotle has always had a significant amount of customer loyalty. Following the E.Coli outbreak last year, Chipotle took a hit on the customer loyalty front. What’s more, company officials on Tuesday reported a net loss of $26.4 million for the first quarter and same-store sales sank a whopping 30%.
As a result, one of the things company officials will consider is a loyalty program for its most loyal customers. No specifics were offered during Tuesday’s first-quarter earnings call, but it would target increased weekly visits.
What’s more, Chipotle officials plan to unveil new products, including a chorizo sausage that was tested in the Kansas City market last year before the E.Coli outbreak and produced favorable results.
“Chipotle has always been a company that is focused on a long-term vision to change the way people think about and eat fast food,” CEO Steve Ells explained on Tuesday, according to Seeking Alpha. “As we move forward, we believe it is critical that we continue to focus on the things that have driven our success for so many years, our unique food culture, and our unique people culture. It’s been our focus on these key drivers of our business that has differentiated Chipotle in a crowded and competitive field and it has allowed us to develop a strong loyalty among our customers.”
These key attributes, Ells added, continue to serve the company well.
“Never has it been more important for us to delight our customers on each and every visit and we have great confidence in our managers and crews to remain focused and to provide the extraordinary customer experience our customers expect from us,” he explained. “We’re also encouraged by the long-term opportunity that still exists for Chipotle both in terms of adding new restaurants and attracting customers who have never tried our restaurants.”
Ells believes there is considerable untapped growth potential for Chipotle.
“And as we continue our efforts to restore lost sales tied to last year’s food safety issues, there is significant opportunity for us to continue to grow our business by attracting new customers and opening new restaurants,” he said. “We begin to see sales recover in the second half of the first quarter as our transaction trends reversed course from the lows we saw in January. Since the beginning of February, we have seen an 18-point improvement in comp transactions compared to the full month of January. We have worked to invite our customers back by reminding them of the things they loved about Chipotle, such as our delicious food, our high-quality ingredients and being treated to a friendly, fast experience inside of our restaurants.”
After the food safety issues last year, Chipotle took several steps to ensure its food was as safe as it could possibly be.
“That included a systematic evaluation of each ingredient and the implementation of interventions to make them safer,” Ells said. “Some changes were made at the suppliers and others were made in the restaurants. Since all of the initial changes were implemented, we have continued to evaluate and refine each procedure.”
During the first quarter, Chipotle hired Dr. Jim Marsden as its Executive Director of Food Safety.
“Jim has been a tremendous asset as we continue to evaluate all of our safety protocols,” Ells said. “Jim was previously a member of the faculty at Kansas State University in their Animal Science and Industry Department. He is working with a number of experts that have advised us in the past and has also worked closely with the U.S. CDC and FDA and other food safety authorities as we continue to implement our industry-leading protocols. Jim’s expertise and viewpoint has had a significant impact in a short period of time and we continue to look forward to his leadership in furthering our food safety program.”
Ells realizes there is a long road ahead to restoring widespread brand loyalty.
“We recognize that it will take us some time to rebuild trust with our customers and to fully recover from the issues we faced late last year,” he said. “And while we are encouraged that the recovery is underway, we know that there’s still a lot more work to be done. We will continue to make it our top priority to entice customers to return to Chipotle through effective promotions and marketing, and when they do return, we're committed to providing the very best experience that we can to help ensure that they will keep coming back. We know that the very best marketing we can do is to provide an exceptional restaurant experience and our managers and crews are working hard to make sure they are doing just that.”