Someday, Chipotle Mexican Grill executives will thank God for the misfortunes of the past year. But maybe not quite yet, since the chain recently reported that same-stores sales were down 29.7% during its first quarter. But they needed this bad news for a reality check. While their misfortunes may have begun with the disease outbreaks of the past year that had customers choosing life over their burrito/bowl addiction, the fact that sales haven’t swung back to normal should be a wake-up call. Those loyal customers may have come to their senses. Here are Chipotle’s challenges, as I see them:
- Their fast-casual status made them (and Panera Bread) the darling of foodservice for the rest of the industry, as consumers, it turns out, like to watch their food made in front of them and to have a say regarding the ingredients. Now guess what. Everyone is doing it. The Chipotle service style has systematically become nearly everyone’s service style.
- Chipotle was the first with the “food with integrity” idea. They may have trademarked it, but now everyone is on it. You want sustainable burgers? Elevation Burger. Sustainable pizza? Pizza Fusion. Sustainable frozen custard? Sheridan’s. In fact, Millennials expect every eatery to operate with integrity. Chickens everywhere are rejoicing. They get to roam free and no longer are subject to hormones. There’s hardly a restaurant chain that hasn’t announced its sustainable intentions. Now they all operate with integrity. Chipotle is no longer a stand-out in that regard.
- And what about menu innovation? It’s absent from Chipotle. The only place I can think of that can successfully get by with an unchanging menu is In-N-Out Burger. In the past three years, Chipotle has only added three things to its menu, other than a few beverages here and there (fajita vegetables, sofritas and cilantro-lime brown rice). Compare that with Panera Bread that just in the past year has added a variety of breakfast menu items, several flatbread sandwiches, a salad here and there, and various seasonal bakery items.
If a product or a brand has a life cycle, like we are taught in marketing classes, Chipotle has reached maturity or saturation in its life cycle. The only way is down, unless it makes some changes.
Maybe they are getting it already. The chain is talking about adding chorizo sausage to the menu. It has also improved its meat by applying a technique from the playbook of fine-dining restaurants—sous vide. That is vacuum sealing the meat and subjecting it to hot water in a slow process with low heat that cooks the meat evenly and retains the meat’s moisture. It’s ground-breaking for a fast-casual.
The words I remember from my marketing class are, “Adjust or self-destruct.” Let's watch and see what happens. Let me know what you think.
Jody
