US: Chipotle loyalty promotion moving the needle

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By: RickFerguson |

Posted on August 3, 2016

US: Chipotle loyalty promotion moving the needle

Good news for troubled US-based fast-casual dining chain Chipotle, which has attempted to recover from a devastating e-coli outbreak with a summer loyalty promotion. Sales numbers may currently be dire, but a few glimmers of hope from the loyalty promotion may mean that a recovery lies ahead.

Chipotle's sales numbers are indeed sobering: Net income dropped from $140 million in the second quarter last year to $25.6 million this year, while same-store sales fell by 23.6% - all numbers that failed to meet analysts' already-modest expectations.

Enter the loyalty programme. While more of a summer promotion than a fully-formed loyalty strategy, Chiptopia has, according to the company, moved the needle. Money quote from co-CEO Steve Ells, courtesy of Reuters:

"While it has only been a few weeks since Chiptopia (loyalty programme) launched, we are pleased to see that July sales comp trends have already improved by 200 to 300 basis points, and transaction comp trends have improved by an even greater amount."

And true to the trend on which we've been reporting this year, the modest gains in the loyalty programme have been picked up by Wall Street: Chipotle's shares are up 2.5% in extended trading, despite the poor sales numbers. Perhaps the good news will encourage Chipotle to make the loyalty programme permanent.

-Rick Ferguson

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