Chipotle has plenty of messengers, but not much of a message.
The burrito chain on Thursday said it plans to have three people temporarily share the duties of its marketing chief, who is on administrative leave after being indicted for allegedly buying cocaine. This comes as Chipotle is still struggling to win back customers after last year's food-safety crisis.
This approach makes little sense. The company needs some real concentrated marketing power right now, as nothing is more crucial to reviving sales than communicating with customers. It certainly has the money to do so -- it has spent more than $1 billion on share buybacks in the past year to shore up its flagging stock price.
So far, giving away busloads of free burritos hasn't quite done the trick. The company's sales collapse eased up in the second quarter, and Chipotle actually turned a profit after failing to do so in the previous quarter. But customers are still hesitant: Sales and traffic were down by 24 percent and 19 percent, respectively, in the quarter from a year earlier.
As executives noted Thursday, this turnaround just isn't turning around fast enough. That's because, as I've argued, Chipotle hasn't done a sufficient job explaining how it has fixed its supply chain and food-handling processes.
Though consumer views of Chipotle's brand and quality have recovered from their depths last year, brand perception is still in negative territory, according to surveys by the research firm YouGov.
Meanwhile, the percentage of U.S. consumers who would consider buying from Chipotle is also still far below historic levels, according to YouGov:
In response, Chipotle has fallen back on its standard approach to advertising, which is to highlight the quality of its food relative to its competitors. It has released videos on such subjects as why it doesn't serve queso (it's impossible to make the cheese dip without processed cheese) and the freshness of the tomatoes and jalapenos in its salsa. It recently released a new short animated film it began making a year ago, extolling the quality of Chipotle's ingredients and making fun of fast-food chains.
That money and manpower would have been better spent explaining to customers why Chipotle is a safe place to eat.
Nearly 60 percent of customers surveyed recently by William Blair analyst Sharon Zackfia said better food safety would be the top incentive to encourage them to eat at Chipotle more -- it's their "highest priority," she said. In comparison, only 40 percent of respondents considered discounts most important. But Chipotle has shied away from specifically mentioning food safety in its marketing campaigns, Zackfia noted.
This disconnect between what consumers want to hear and what executives are telling them isn't new. It took months for Chipotle's CEO to actually apologize for any hand the burrito maker may have had in poisoning its customers. Since then, Chipotle has failed to give customers a convincing explanation of what happened and how it's making sure such a thing won't happen again.
If it expects customers to return, it's going to have to get on their wavelength.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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