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 on Wednesday unveiled a new advertising campaign directly assuring restaurant-goers it's safe to eat at the burrito chain, which is still struggling to rebound from last year's food-safety crisis.

It marks a much-needed change in messaging to win back lapsed consumers -- better late than never. 

That's A Wrap
Chipotle's shares have tumbled 45 percent in the past year
Source: Bloomberg

Gadfly has repeatedly chastised Chipotle's management for failing to use its advertising dollars to specifically address the reason people stopped eating its giant burritos in the first place -- they were afraid they might get sick.

Chipotle CEO Steve Ells reluctantly apologized on the Today show back in December, but then it was back to the same old advertising spots about how nicely the company treated its farmers. It promoted a short animated film extolling how much healthier Chipotle's ingredients are than those of its fast-food competitors. And it gave away millions of dollars' worth of free burritos.

But none of that was enough to lure customers back to the chain, which recently admitted in a filing it wasn't even sure burrito giveaways actually increased sales. It also didn't help repair the trust Chipotle had built with loyalists.

Hunger Strike
Chipotle's sales dropped 24% in the latest quarter from the year before
Source: Bloomberg

Consumers' once-solid view of the Chipotle brand cratered in the wake of the food-safety crisis and has only partially recovered:

Leftovers
Chipotle's brand and quality perceptions have recovered somewhat from its food-safety crisis, but improvements have stalled lately
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

Finally, after nearly a year of skirting the safety issues in its marketing, Chipotle is changing course. 

"We failed to live up to our own food safety standards, we let our customers down," Ells said in a video and full-page ads in The Wall Street Journal and other publications. 

chipotle-ad-apology

Ells reiterated a promise to bolster Chipotle's food-safety protocols and detailed a number of changes made across the chain and -- this is key -- explicitly reassured customers it's safe to eat Chipotle's food.

This messaging push certainly won't solve all of Chipotle's problems.

For one, while Chipotle has been struggling to recover from its crisis, competitors such as Panera Bread have pulled ahead in the healthy-food race.  Its former growth engine -- building new stores -- has run out of gas. Labor and food-safety costs are rising. Investors are angry with management and entrenched board members. 

Meanwhile, discounts and price wars abound, as U.S. spending at restaurants has slumped after overtaking grocery stores for the first time ever last year. That's going to make it even harder for Chipotle to increase sales. 

Sales Crunch
This is what the start of a so-called restaurant recession looks like
Source: bloomberg and MillerPulse

And Chipotle can expect harsher scrutiny now that it has activist investor Bill Ackman picking at its food. 

But the change in tone should go a long way in getting customers to come back. About 60 percent of customers surveyed by William Blair earlier this year said knowing it was safe to eat at Chipotle would be the top incentive to get them to eat there more. 

Americans will come back to food they love -- just look at the redemption stories at Taco Bell or Jack in the Box. They just need a little reassurance that it's OK to forgive. Chipotle has taken the first step in bringing them closure

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