It’s been a rough ride for Chipotle.
Last year, the restaurant giant sickened scores of consumers with E. coli and hundreds more with norovirus. The company went to extensive efforts to eliminate food safety risks and launched broad marketing and advertising campaigns to bring back leery consumers.
Some customers, however, are ready to say, “no bueno” to the once popular Mexican restaurant.
A new survey from the American Customer Satisfaction Index, which asks Americans how satisfied they are with the service they get across several industries, confirmed it was a rough year indeed for Chipotle.
Chipotle took the biggest nosedive of any entry on the list, dropping by 6% to the middle of the pack.
In this index, a plunge of this magnitude isn’t just a drop in the bucket. Dr. Forrest Morgeson, director of research for ACSI, told Eater in an article here his group considers a 3% drop significant.
For Chipotle to fall by 6% is substantial, especially year-over-year.
What does a decrease in the index mean?
"For most industries, there is a strong relationship between consumer satisfaction and sales," Morgeson said. "More satisfying companies have more loyal customers. And loyal customers lead to a healthier financial performance."
Chipotle isn’t giving up, though.
Beginning July 1, Chipotle will roll out a new loyalty program called “Chiptopia Summer Rewards.” These rewards will last for three months and provide free food for customers who make multiple visits to Chipotle within a 30-day timeframe. Read more here.
Will it be enough to save the brand? Maxim analyst Stephen Anderson doesn’t think so. He recently reiterated his “sell” rating and a $285 target on Chipotle stock.
Anderson acknowledged that these giveaways aren’t as extreme as those seen earlier this year when Chipotle doled out free burritos by the millions and represents “a new normal for the company as it works to rebuild traffic at its stores and regain consumer trust,” he said.
The news wasn’t all positive though.
Anderson warned that Chipotle now faces “permanently higher costs” from increasing its food safety compliances, in addition to potential mandates for higher minimum wages and legal risks from an ongoing Federal criminal probe.