Can free burritos help Chipotle maintain its market leadership? The company is certainly willing to try.
The Associated Press reported today that Chipotle has plans to expand its burrito giveaway, part of its campaign to persuade people that its food is safe. After an E. coli outbreak and other health scares sent sales plunging, the chain made plans to give away more than 20 million burritos via coupons or mobile offers. “It was kind of eerie — and we’d hear this from customers,” who would walk by a once-busy restaurant and see “now there’s no line whatsoever,” said John R. Hartung, Chipotle’s chief financial officer. He said it was important to let the chain’s 2,000 restaurants “look like Chipotle again.” Heading into summer, Chipotle said it would consider “buy one, get one” offers or more targeted mobile offers in regions of the country where a recovery in sales is lagging. The strategy has its costs. The company said Tuesday it expected to report a loss of $1 a share or more for the January-to-March quarter, its first loss since going public in 2006.
A primary target is the chain’s most frequent customers, who are most likely to return if given enough incentive. In addition, the Centers for Disease Control’s investigation has declared Chipotle’s recent food contamination crisis over. Still, several experts have opined that Chipotle will recover but that it won’t happen overnight.