Chipotle announced a new loyalty program, but the arrival of a new CEO adds a question mark to the plan
By Richard Pachter
For a while, Chipotle seemed golden. Its highly imaginative Tex-Mex-ish menu and innovative production-line meal service took the fast food category by storm. But their upward trajectory was reversed after E. coli outbreaks in 2015 and subsequent sales and revenue declines.
It’s been a challenging time for owners and shareholders, probably made even more difficult by the growth of the fast-healthy category and an explosion of other dining choices.
Morningstar analyst R.J. Hottovy said “Chipotle possesses several strategic advantages, including a simple but uniquely customizable menu and pleasing restaurant designs. Even with its current struggles, we forecast(ed) Chipotle will generate $4.5 billion in sales during 2017, making the company still one of the largest players in the $10 billion-plus fast-casual Mexican category and $44 billion domestic fast-casual category and an important partner for suppliers.”
In the aftermath of its crisis, Chipotle introduced Chiptopia, a temporary rewards program that proved to be quite popular. Based on the number of visits, just not on amounts spent, the program was also widely criticized.
But according to a recent report, Loyalty is making a comeback at Chipotle. It’s not yet known if the new rewards program will be “Chiptopia, The Return” or something else (the company isn’t saying). The new Chipotle rewards program is expected to launch during the second half of this year.
Chipotle’s new rewards program will allow it to differentiate itself from the competition, said Tom Caporaso, CEO of Clarus Commerce, a loyalty marketing/technology platform.
Things could change, however. Next month, Brian Niccol becomes the new CEO, replacing M. Steven Ells, Chipotle founder and chairman. Niccol was most recently CEO of Taco Bell, where he helped lead the successful turnaround of the business. Though it may not be on the very top of his “to do” list, Niccol may have a few ideas of his own, among which could be replacing or eliminating the planned Loyalty effort.
One clue to a new direction could be found in the bright spot in the chain’s fourth-quarter results; digital, which outgoing CEO Ells said was the fastest-growing part of his business.
“We continue to be optimistic as we further market this capability and as guests increasingly order Chipotle through digital platforms,” he said.
A digital loyalty program with emphasis on mobile ordering could pave the way to a brand revival. Along with a marketing refresh engendered by the arrival of a new CEO with an established and successful track record for edgy advertising and out-of-the-box products, it’ll be interesting to see what’s in store for the once-stellar brand.
Read about the announcement of the new Chipotle Rewards program here.
Richard Pachter is Editor at Large for The Wise Marketer.