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.

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. 

Progress?
Chipotle's shares rose 5% after second-quarter sales showed a slight improvement. Shares are still down 40% for the year.
Source: Bloomberg

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.

Buzz Off
Chipotle's brand and quality perceptions have improved, but remain tarnished. An index score above zero is positive, below zero is negative.
Source: YouGov BrandIndex
Note: YouGov interviews 4,500 American adults each weekday. Buzz asks if what you've heard about brand 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

Meanwhile, the percentage of U.S. consumers who would consider buying from Chipotle is also still far below historic levels, according to YouGov:

Not Buying It
Chipotle's purchase consideration has increased, but remains well below historic levels
Source: YouGov Brand Index

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.

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