Consumer

Shelly Banjo is a Bloomberg Gadfly columnist covering retail and consumer goods. She previously was a reporter at Quartz and the Wall Street Journal.

Food is the fastest way to a person's heart, right? That's ostensibly why, on Tuesday, Chipotle said it would launch some new menu items in a bid to win back customers after a food-safety crisis that led to its first sales drop as a public company

Fall From Grace
Chipotle's sales have plummeted as it tries to recover from a food-safety crisis that began last November
Source: Bloomberg

It's an unusual move for Chipotle, which has staked its success on a simple menu for much of the past 20 years and rarely changes its offerings. But the company said it was planning to roll out Chorizo, a spicy sausage made of pork and chicken. It's been popular with customers in test runs and could give restaurant-goers another reason to come back. Operationally, it's an easy addition: Chorizo will just slide right on the grill with the chicken and steak. 

But why settle for just adding another kind of meat, when adding a whole new -- but simple -- menu category could really lure old and new customers alike? I'm talking about a breakfast burrito: eggs, potatoes, cheese, and hot sauce all wrapped in a warm, fresh tortilla. Maybe add some Chorizo? Now that's a burrito. And it's something that could bring lapsed customers back to the troubled chain. 

Breakfast is all the rage in the restaurant world today. All-day Egg McMuffins have helped McDonald's post three quarters of positive sales growth at established locations after a years-long struggle to boost sales. All-day breakfast has also helped McDonald's attract new customers who may never have come into a fast-food chain otherwise (read: millennials who don't consider eggs to be unhealthy fast food). 

Breakfast Buzz
McDonald's brand perception soars following the launch of all-day breakfast
Source: YouGov Brand Index
Note: Buzz score asks adults 18 and over if what they've heard about the brand in the last two weeks was positive or negative. A score is compiled by subtracting negative feedback from positive. A zero score means equal positive and negative feedback. Score ranges from 100 to -100.

Earlier this month, Starbucks said its breakfast sandwich sales increased by 30 percent in the most recent quarter from the year before, driving traffic to the store and boosting customers' overall spending. Taco Bell, which began serving breakfast items at some of its stores in 2012 before expanding the offerings in 2014, now takes in 7 percent of its sales from waffle tacos and the like. In March, Taco Bell launched a $1 breakfast menu and said it saw an 8 percent increase in breakfast transactions in the quarter. 

Morning, Sunshine
Mcdonald's decision to serve all-day breakfast almost immediately helped boost sales
Source: Bloomberg

Could the same approach work for Chipotle? 

Sure, a host of operational challenges comes with serving breakfast. Take McDonald's, where operational constraints kept it from launching all-day breakfast until decades after consumers started demanding it. The grills McDonald's used to cook burgers didn't work so well with eggs, and English muffins need a different heat setting than burger buns. Estimates for new equipment to make breakfast ranged from $500 to $5,000 per restaurant, according to Bloomberg BusinessWeek

McDonald's Is Lovin' It
All-day breakfast helped reverse a years-long decline at McDonald's. Could it do the same for Chipotle?
Source: Bloomberg

Chipotle would have to open its doors hours before its current opening time of 11 a.m., adding to labor and other costs. It would have to train employees to cook new food. And it would add complexity at a time when Chipotle is already struggling to implement new food safety procedures. I previously panned the idea of Chipotle taking on more challenges when news surfaced in March that Chipotle had filed a trademark application for a new burger chain called "Better Burger." At the time, I urged Chipotle to stick to burritos

The thing is, breakfast burritos still fit into Chipotle's burrito wheelhouse. The company really needs to find a way to grow traffic again. And boy, has breakfast been a boon for Chipotle's old corporate parent, McDonald's. Just some food for thought. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Shelly Banjo in New York at sbanjo@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net