Does Chipotle Need an Experiential Loyalty Program to Earn Back Customer Trust?

Two years ago, Chipotle endured an E. coli outbreak that affected almost 60 people who ate at the massively popular burrito chain. That incident was well documented and caused company officials to take strident measures to take control of food safety, experiment with a temporary loyalty program, and restore brand loyalty among its customers.

After making solid progress since then, this month the company closed a restaurant in Sterling, VA, following multiple reports of customers getting sick after eating there. As a result, Chipotle’s stock sank and more than 130 people claimed they had become ill after eating at the restaurant. 

Is this kind of public relations nightmare something Chipotle can overcome?

Kate Hogenson, strategic loyalty consultant, Kobie Marketing, offered her views on the Chipotle situation to Loyalty360.

“From a customer loyalty perspective, it’s really unfortunate that Chipotle is suffering from another food poisoning scare,” Hogenson said. “It has the potential to scare off even loyal Chipotle customers if not addressed and rectified. Restaurant customers don’t necessarily want an apology or a discount. They want to know that it will never happen again. As we saw last year with their summer rewards program Chiptopia to battle their previous food incident, simply handing out free food and discounts doesn’t do much to change the hearts of customers. It’s a quick hit behavioral incentive. Chipotle’s sales have continued to decline and only cost-cutting measures enabled them to increase their second quarter earnings. You need to engage the customer’s emotional loyalty with convenience and personalization. Chipotle should really look to create a more experiential program that engages with customers in and outside of the store to build a relationship based on positive experiences to earn back their trust.”

Chipotle founder and CEO Steve Ells addressed the recent food poisoning incident and the current state of the company during this week’s second-quarter earnings call.

“As we’ve grown, we have also encountered our share of adversity,” Ells explained. “Our unprecedented success leading up to 2015 has masked operational weakness in some key areas of our business. The food safety incidents of 2015 revealed that our food safety program needed to be more robust and it became clear that we were focused too much on building cultures that didn't drive the results we were expecting, and too little on the operations fundamentals required to deliver an exceptional guest experience. Upon returning to the position of sole CEO at Chipotle late last year, I committed to fulfilling the promise of dramatically improving the guest experience and making Chipotle the safest place to eat.”

Ells said the company has formed an independent food advisory council comprised of the nation’s leading food safety experts to oversee and advise on food safety practices.

“I directed our Head of Food Safety, Dr. Jim Marsden, to develop the most comprehensive food safety program in the industry,” Ells said. “Jim has implemented a robust food safety program, which includes the implementation of a HACCP food safety program in all of our restaurants. HACCP stands for hazard analysis and critical control point, and we’re the only major restaurant company to have such a program; the implementation of a third-party food safety auditing system, all managers earn a rigorous food safety certification; the installation of advanced ventilation purification systems in our restaurants; and the implementation of a rapid deployment team, including food safety experts and nurses in the event that any food safety incident does occur.”

Ells said that is impossible to eliminate all risk.

“And unfortunately, we had a norovirus incident in one of our restaurants in Virginia last week,” he explained. “Norovirus is a common and highly contagious illness affecting nearly 20 million Americans each year and is unrelated to our food supply chain. It’s commonly spread within closed environments like cruise ships, schools, and restaurants. We’re disappointed that we failed to prevent it from affecting our customers and employees in our Virginia restaurant. We deeply regret that anyone became ill and I’d like to apologize to those who were affected.”

Ells added: “We know that our procedures work when executed properly, but compliance in each restaurant is essential. To reduce the risk of this happening again, we are undertaking an additional comprehensive communication and training effort to ensure that every manager and every field leader understands and execute these norovirus prevention procedures, and that they understand that compliance with our procedures is non-negotiable and a condition of their employment. We will continue to build a culture of compliance in our operations through relentlessly training and enforcing adherence to our policies.”

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