It took Chipotle 22 years to transform itself from a burrito stand to a $23 billion brand. The brand did it by meeting customer expectations regarding fresh, locally sourced, customizable food at a good price long before the competition even thought about the phrase, “genetically modified,” let alone positioning their offerings as “fresh” or “customizable.”
Chipotle showed up on the Brand Keys Customer Loyalty Engagement Index a decade ago in 2006. And over the next five years the brand moved up the fast-casual restaurant loyalty list to the No. 1 spot. By then everyone in the category was chasing Chipotle—for being fresh, for being additive-free, for being customizable. The brand seemed unstoppable.
But in less than a year, outbreaks of E. coli bacterium and salmonella-related illnesses to dramatically affected customer loyalty. Same-store sales, which had reached a brand and category best of 20 percent, dipped almost 15 percent last quarter. So it came as no surprise that in our 2016 Customer Loyalty Engagement Index, Chipotle dropped to the No. 6 spot out of 21 brands on this year’s list, five of which were new. Why the drop? And why didn’t the brand fall further?
The drop itself is self-evident. When it comes to loyalty, customers are six times more likely to give a brand the benefit of the doubt in adverse circumstances like the original outbreak. But following repeated cases, the fountain of customer forgiveness is nearly dry, and it’s showing up in how consumers see the brand meeting their expectations. The value of “safe food preparation” has always been a value component in the category but has had generally low expectations surrounding it. Fast-casual consumers don’t expect to get sick from the food.
That said, last week Chipotle received a grand jury subpoena related to an outbreak in California, an indication that the Justice Department and the FDA might be considering a criminal case. In the meantime, Chipotle, conceding that they may be more vulnerable than other fast food and fast-casual restaurants because of their fresh ingredients and fresh preparation, has put food-safety controls into place that should reduce the risk of food contamination to virtually zero, and is closing down the entire chain for a few hours next month for a food-safely meeting.
Will this help the brand? It can’t hurt. And with the previous loyalty levels, customers are also six times more likely to believe the Chipotle brand. Because when it comes to loyalty, consumers question all their beliefs except the ones they really believe, and those they never question.
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