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Has Chipotle Recovered?

Has Chipotle Recovered? Has Chipotle Recovered? Has Chipotle Recovered?
01/20/17
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by Amy Robertson
Chipotle had a difficult end to 2015 with outbreaks of E. coli, Norovirus, and Salmonella sickening hundreds of people who had eaten at its restaurants across the nation. CEO Steve Ells called the fourth quarter of 2015 “the most challenging period we've ever faced in our 23-year history”. The food safety crisis crushed the healthy “Food with Integrity” image that Chipotle cultivated since its beginning. It has now been more than a year since the outbreaks and we can use BAV data to examine how Chipotle’s brand was affected and to what extent it has recovered.

Between 2012 and 2015, Chipotle was a strong Leadership brand, improving its brand position on the BAV PowerGrid and equity on all four pillars ... However, following the food safety crisis Chipotle experienced a sharp decline in its brand position in 2016 driven mainly by decreases in Differentiation, Relevance, and Esteem. The food safety crisis most dramatically impacted Relevance (measures a brand’s ability to be meaningful and have personal appropriateness in the lives of consumers) and Esteem (measures the extent to which consumers like a brand and hold it in high regard). At the end of 2016, Chipotle’s brand position was lower than it was in 2012, due to its significant loss of Relevance and Esteem.

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Diving deeper into the aftermath of Chipotle’s food safety crisis, Chipotle’s brand position and equity declined the greatest amount in the first quarter of 2016. Chipotle fell into the Mass Market quadrant, as Relevance and Esteem significantly declined along with Differentiation. Chipotle’s biggest decrease in sales of 30% also came in this quarter immediately following the crisis. In the second quarter of 2016, Chipotle’s Relevance and Esteem continued to decline and they fell into the Fatigued quadrant, with sales falling 23.6%. Chipotle began to see slight improvements in the third quarter due to improving Relevance, perhaps driven by promotions to bring back its frequent customers. During the first two quarters following the crisis, Chipotle gave away more than 6 million burritos along with other deals focused on restoring customer trust and re-establishing customer frequency. However, sales continued to be depressed and even fell 21.9% in the third quarter. Chipotle finally saw improvements in the fourth quarter, improving Esteem for the first time since the crisis and seeing positive sales growth (+15%). In the third quarter, Chipotle launched its “Chiptopia” promotion which gave rewards based on frequency of visits rather than total amount spent, perhaps accounting for the large gain in Relevance and upturn in Esteem. 6 million people signed up for Chiptopia and 2.5 million earned rewards.

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As a result of the food safety crisis, Chipotle also experienced declines in imagery associations related to trust and brand loyalty. Chipotle declined most on associations of Healthy, High Quality, Leader, Trustworthy, and Reliable. These imagery changes significantly impact their core brand meaning of “Food with Integrity” and their mission of “ensuring that better food, prepared from whole, unprocessed ingredients is accessible to everyone”.

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The food safety crisis had a huge impact on Chipotle’s brand. Chipotle lost all the brand equity it worked to build over the last 5 years and in 2016 fell close to where it stood in 2012. But when we closely examine 2016, Chipotle appears to be on the road to recovery with slight improvements in the third quarter and a promising upturn in the fourth quarter. Changing its safety procedures and improving marketing and promotions appear to be helpful steps to win back customers, but the food safety crisis most deeply affected Esteem and imagery perceptions of the brand. These challenges may plague chipotle for years to come and may make it difficult to bring the brand back in line what it once stood. Only time will tell.

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All Content © 2017 BrandAsset Consulting
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