Executive Briefings

Chipotle's Experience Shows Difficulty of Bouncing Back from Business Disruption

Following a food safety scare last year in which hundreds of people fell ill after eating Chipotle products contaminated with E. coli bacteria or noroviruses, the company - which has long advertised its fresh, high-quality ingredients - has seen its stock price fall by double digits.

So Chipotle decided it was time for a new marketing push, one that would remind customers what drew them to Chipotle in the first place. This corporate reboot included instituting a temporary loyalty plan, something the company had long resisted, that started on July 1 and rewards repeat customers with free food.

Then, another bump in the road.

Within days of the program starting, the company’s chief creative and development executive, Mark Crumpacker, who had been leading the reboot, was charged with drug possession and named by the police as a repeat buyer of cocaine from a New York delivery service. He was placed on administrative leave.

All of this prompts worry that a significant percentage of frequent Chipotle customers “are unlikely to return anytime soon,” according to a recent review by UBS. Food safety concerns, the April analysis said, weigh less on confirmed fans. However, “lighter users,” the research found, “appear to be much more negatively impacted by the incidents and are more inclined to reduce visits.”

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So Chipotle decided it was time for a new marketing push, one that would remind customers what drew them to Chipotle in the first place. This corporate reboot included instituting a temporary loyalty plan, something the company had long resisted, that started on July 1 and rewards repeat customers with free food.

Then, another bump in the road.

Within days of the program starting, the company’s chief creative and development executive, Mark Crumpacker, who had been leading the reboot, was charged with drug possession and named by the police as a repeat buyer of cocaine from a New York delivery service. He was placed on administrative leave.

All of this prompts worry that a significant percentage of frequent Chipotle customers “are unlikely to return anytime soon,” according to a recent review by UBS. Food safety concerns, the April analysis said, weigh less on confirmed fans. However, “lighter users,” the research found, “appear to be much more negatively impacted by the incidents and are more inclined to reduce visits.”

Read Full Article