Customer EngagementEngagement StrategyIndustry News

Chipotle’s New Direction

What your restaurant can learn from Chipotle’s new strategy

 

Some things at Chipotle are perfect just the way they are (that hint of fresh lime complementing the salt on their tortilla chips, anyone?).
 
Management, though, has recognized the need to freshen up the brand. And with the unveiling of new CEO Brian Niccol’s five-point plan, the Mexican fast-casual chain is finally taking bold steps to elevate the overall customer experience.

 

What went wrong?

Chipotle’s negative growth in recent years is a perfect example of what can happen when a brand loses the trust of its consumers. The chain originally started out doing a lot of things right. They had a strong company culture, a low-cost, inside-out marketing approach, and a commitment to sustainability.

But ever since a string of serious food safety cases - Hepatitis A (2008),  Norovirus (2015), and E-coli (2016)  - the chain has been struggling to regain its prior credibility.

Spinning off new, non-core brands hasn’t helped: TastyMade (their version of Shake Shack) shuttered 18 months post-launch, and while Asian offshoot ShopHouse made a five year run, it failed to garner any meaningful traction.

The biggest sin of all though? A lack of customer engagement. Chipotle was one of the first brands to truly ignite America's push towards trendier fast casual establishments. But more recently, growth (and the brand's luster) seem to have stalled, health-related issues aside.
 
According to Bloomberg, in Q1 of 2016, in the midst of the food safety scandals, Chipotle’s sales were down 30% compared to their Q1 sales of the previous year. Now in 2018, their growth is finally net positive, but their sales have only increased by 2% with respect to 2017’s numbers around the same time.

 

Who’s the new guy?
Cue Brian Niccol, the ex-Taco Bell CEO widely credited for the fast-food company’s turnaround. He implemented mobile order and pay at Taco Bell and a new menu with breakfast offerings. Most importantly, he repositioned the brand as a lifestyle choice through catchy marketing (Live Más) targeted at the chain’s young audience.
 
Replacing Founder-CEO Steve Ells in March of this year, Niccol has brought the same ideals over to Chipotle, stressing the importance of “leading culture, not reacting to it.”

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What’s Chipotle doing now?
Menu Innovation
First off, Niccol wants Chipotle to develop and test new menu items continuously. Some ideas for snack items like an avocado tostada and a happy hour special of $2 tacos with a drink, are in the works.
 
Updated Marketing
With Chipotle’s millennial penetration twice what it is among older age groups, the chain is trying to refocus efforts on savvy marketing to young diners.
 
Making the brand more “engaging, visible, and culturally relevant [...] while providing an excellent guest experience” is Niccol’s latest priority. Chipotle’s brand has always been centered around sustainable, non-GMO ingredients.
 
With the slogan ‘food with integrity’, they have built a story around the freshness and integrity of their ingredients. Chipotle's brand is rooted very heavily in this bigger picture mission to change the way people think about and eat fast food.
 
A Loyalty Program
Since the start, management has characterized Chipotle’s customer base as young, loyal, health-conscious, and sustainability-driven. But the numbers actually show that the majority of Chipotle customers only eat there a couple times a year. Not exactly what Kendrick would call loyalty, loyalty, loyalty.
 
So Chipotle is finally launching a permanent loyalty program, which will be tested in late 2018 ahead of a full rollout in 2019. The program will reward purchases made both in-store and through the Chipotle app. The chain is looking to incentivize customers to visit more often and try new items through personalized "one-to-one" marketing.
 
Digital Strategy
Their biggest changes, however, are on the digital front. Focusing on the ‘fast’ in fast-casual, Niccol is getting Chipotle on the side of technology to speed up the kitchen and make delivery and mobile ordering easier.
 
Chipotle is proud of its ‘second make line’, a separate food assembly line in their kitchens specifically used for fulfilling takeout and delivery orders. They’re now taking them to the next level.
 
To improve order accuracy and employee efficiency, Chipotle installed big screens above the line that displays incoming orders via a highlighted grid showing the flow of ingredients. On a separate touchscreen, mobile and delivery orders are automatically organized by pickup time.
 
Chipotle is already on PostMates and DoorDash but has also pledged to offer delivery through its app from about 2,000 restaurants by the end of the year. They're also trying to keep delivery times to just above 30 minutes.
 
The chain has rolled out mobile pick up shelves in select NYC locations, where stores keep digital pre-orders on a shelf for customers to grab their order and go. And finally, the company is discussing primitive plans to have digital drive-thrus at some of their locations where customers would order and pick up without having to leave their seat.

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The Takeaway?

Retaining diners is a universal struggle. Even the Chipotle’s of the restaurant business have struggled with customer loyalty and have realized later down the line that they actually need to devote time, thought, and energy into an engagement strategy. Yes, these larger companies have the time and the money to spend on marketing.

But as a smaller business, you actually have an advantage.  

Chipotle has to expend a lot of resources to figure out who their target customers are and what they want. With 2,250 locations worldwide, it becomes difficult to constantly fine-tune menus and try out new technology.

For smaller businesses (50 or fewer locations), data is a lot easier to control and manage. It’s easier to have a one-to-one relationship with the customer, and there are tools like Bikky out there to help.

Making customer feedback your top priority could give you valuable insight into what you’re doing right and wrong, so you can devote time to the right areas.

Customer engagement is key, whether you’re a small restaurant trying to retain diners or a national chain making a comeback. With the restaurant space currently fueled by digital growth, one-on-one personalized marketing can put your restaurant (back) on the map.  

Get closer to your customers, and grow your business.

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