Can the burrito chain finally call a wrap on its lengthy crisis?
Chipotle Mexican Grill Inc’s (CMG.N) sales rose for the first time in five quarters as the burrito chain’s efforts to bring back diners after a series of food safety lapses start to pay off.
The company said sales at established restaurants jumped 26 percent in January, putting it on track for its first quarterly increase in six quarters.
Can you believe that it’s been nearly a year and a half since the E. coli outbreak that sparked a widespread crisis for Chipotle? The company’s been in a sales slump since November 2015, when a serious of food-related illness cases combined with increased competition in the “fast casual” space to put the hurt on the burrito chain that appeared on the fast track to dominance. In the time since Chipotle has spent heavily on advertising and marketing to bring hungry customers back. It’s also made operational changes to improve food safety which, with no additional outbreaks since the original series, appears to be working.
While Chipotle did make public statements early on about its new commitment to food safety, the overall strategy put in place has been tilted more towards helping people “forget” the problem. There are pros to this approach, if you have the ad spend to do it. For example, not rehashing the food safety issue means you don’t bring it to the attention of stakeholders who weren’t aware. You also shorten the time it takes to resume “business as usual”. At the same time, by letting others focus on the issue you leave stakeholders to get info from…well…others. That leaves room for rumor, innuendo, doubt, and even conflicting interests to creep into any coverage they may see.
Thus far it’s working for Chipotle, and with the progress made I’d expect both reputational and financial recovery to continue – barring additional incidents that extend the story of course.