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Burrito Giveaway Ending, Chipotle’s Positioned For Slow Comeback

Ahead of Tuesday’s Q1 earnings, Chipotle is steadily climbing out of its food safety crisis as rivals Moe’s Southwest Grill and Panera Bread fight hard for the same customer base, in-store attribution platform Placed finds.

Chipotle will faces dubious investors on Wall St. Tuesday after the closing bell. But the tougher battle than shoring up the slight gains in its stock price is maintaining the incremental return of customers following a health scare that erupted after a food-borne illness outbreak a year-and-a-half ago.

Location attribution specialist Placed has released insights of 13 months worth of store traffic at Chipotle’s 1,900 outlets. The Seattle-based geo-focused audience measurement company sought to determine the affect of the two separate food-borne illness outbreaks that began last August had on foot traffic at Chipotle and its closest rivals.

Foursquare’s recent analysis of Chipotle’s visitations concluded that sales will be shown to be off 30 percent since the outbreak, which left roughly 60 people sick. Jeff Glueck, Foursquare’s CEO, has advocated that Chipotle to adopt a permanent loyalty program following the free burrito coupons that have been offered to customers via download and direct mail since February.

The free burrito promotion has cost the company roughly $70 million and it is scheduled to end in May. That’s when Chipotle will have to come up with other ideas — it has consistently downplayed the value of loyalty programs to maintain the momentum it has recaptured.

January 2016 represented the near term bottom in terms of visitor share (8.06 percent of the US population visiting), with upticks in February and March tied to the end of the incidents and the introduction of free burritos,” Placed’s report says. In March 2016 saw visitor share of 8.81 percent nearly matching that of the year prior 8.86 percent.

“Chipotle’s strategy of pulling consumers back into their restaurants through the use of coupons is clearly working with the increases in visitor share in February and March,” Placed CEO/founder David Shim told GeoMarketing. “With the free burrito coupons expiring in May, it will critical to see if this recent uptick holds, or if the gains were only temporary and foot traffic returns back to the lows a few months back.”

According to Placed, here’s how the competitive landscape looks for Chipotle:

Among those who visit Chipotle less frequently due to the outbreaks, 23 percent used a free burrito coupon during their visit, which is at a 27 percent higher rate than those who visitation didn’t decrease during the same timeframe.

Of consumer visited less frequency after the incidents and recently used a coupon:

  • 45 percent – Last visit to Chipotle was greater than 30 days
  • 61 percent – Likely or Extremely Likely to come back in the next month

Asked about the disconnect between that 45 percent of less-frequent visitors versus the 61 percent who expect to return within a month, Shim said, “It highlights a shift in perception in that the consumer who hadn’t recently visited Chipotle due to the E.coli scare is now 36 percent more likely to visit in the next month (after coming into the restaurant and redeeming the coupon for a free burrito).”

Chipotle Survey – Visitors to Restaurant in April 2016:

  • 46 percent – Visited Chipotle in the last two weeks
  • 46 percent – List primary reason for visit as craving Chipotle
  • 19 percent – List primary reason for visit as free burrito coupon
  • 70 percent – Likely to visit Chipotle again in the next month
  • 90 percent – Aware of E. coli incidents
  • 21 percent – Aware of E. coli incidents and as a result lowering frequency of visits

Rivals captured former Chipotle fans during October 2015 vs December 2015):

Moe’s Southwest Grill, 5 percent Increase in Visitor Share in the Mexican Restaurant Category

Panera Bread, 7 percent Increase in Overlap with Chipotle Customers

“If Chipotle is able to hold onto the gain post-May, when the coupons expire, it highlights the trend has turned and Chipotle is normalizing to historical averages in terms of share of visitors. This translates to Moe’s and Panera gaining less consumers at the expense of Chipotle, but the opportunity clearly exists to retain those who made the switch in October to December 2015.

About The Author
David Kaplan David Kaplan @davidakaplan

A New York City-based journalist for over 20 years, David Kaplan is managing editor of GeoMarketing.com. A former editor and reporter at AdExchanger, paidContent, Adweek and MediaPost.