It’s extra for guac?!
In these hard times, the food and beverage industries all over the world have taken a massive hit due to having to close their doors to limit the spread of the virus. As a result of this situation many restaurants that only offered dine-in options have had to adapt to stay in business by adopting delivery apps.
Chipotle is no different. They realized that with stay-at-home directives becoming more prevalent and all regions shutting down their dining rooms, their sales were deteriorating. According to their reports, they were at almost -30 percent sales.
The CEO also realized that while at the beginning of this pandemic, consumers were getting groceries and cooking at home to save money. When stimulus money and tax refunds started coming in, restaurants have found a solution for people who need other options. While their physical stores might be closed all over the world, the good news for Chipotle is that they had already established a digital presence before the pandemic hit. Chipotle went beyond signing up for food-delivery apps and raising awareness, they also adopted tech-driven strategies in restaurants to handle increased volume, built pick-up shelves, and expanded the development of drive-thru Chipotle locations.
Part of the reason why Chipotle has managed to stay afloat during this time is because of strategies they had already implemented before COVID-19. They had already strengthened many of their food-safety initiatives by conducting wellness checks before every shift and training nurses to evaluate any employee who might feel sick to see whether they should be excluded from work but still be given full pay.
They also installed advanced technology air purification systems to reduce the risk of viruses, supplied Purell sanitizer for employees and guests, required gloves to be worn for all tasks, improved internal training and education, engaged an outside consultant to perform regular inspections for all restaurants, along with other things. As the virus started to spread, Chipotle formed a task force to hold daily calls and implemented increased sanitation of high-touch, high-traffic areas; provided masks for employees, and added tamper-evident packaging seals for off-premises orders. Digital sales still remains a top priority for them and their adoption of digital strategies is a major reason why they have managed to survive.
Chipotle’s Marketing Strategy
Chipotle always been focused on non-traditional advertising, mainly by generating positive word-of-mouth advertising. Regardless of their small advertising budget, they have found interesting ways to generate positive publicity over the years and they actually seem to be working. They use the “Cause Marketing” strategy to promote the message of sustainable food and responsible agricultural practices because they realized that this was a major issues that customers care very deeply about.
Let us now look at some of their best word-of-mouth strategies and tactics that they have implemented successfully:
- Get customers to express their love for their food
- Produce web series
- Stay top-of-mind
- Get the nation talking about an important issue
- Implement influencer marketing
- Host festivals and generate buzz
- Run news columns to spread their message
- A controversial ad campaign
- Create genuine online interactions with their customers
1) Get customers to express their love for their food
In early 2015, Chipotle ran a contest on social media platforms offering a dinner for two for the 20 of the best menu items, which was decided by retweets, likes, and shares, burrito themed haikus that the customers came up with.
This contest actually went really well because:
- People are usually proud of their creativity and are eager to share it.
- The contest encouraged contestants to look for the support of close friends and family.
- Many of the haikus created were quite funny and they only take seconds to read. Low time commitment + high entertainment value = more shares.
2) Produce web series
Chipotle did really well when it came to its branded content. They used Tim Piper, the director of campaigns like Dove and Post Shredded Wheat, to create a comedic web video series called “Farmed And Dangerous”.
The series itself was unbranded, with no mentions of Chipotle, but it portrays the ugly side of agricultural industry and its plan to revolutionize the industry with PetroPellet.
The production itself made a very large emphasis on the quality from beginning to end, using cameras that were typically used for blockbusters and the post editing was quite good. Chipotle understood that dedicating a large amount of effort towards production value would get audiences to appreciate the content more.
3) Stay top-of-mind
Because we live in a generation where people are getting ‘Text Neck” from looking at their phones too much, Chipotle (much like a lot of other companies) decided that creating an app to help customers to make orders and skip the lines would be beneficial for their business.
The app, designed by app developer Blue Rocket, focused on ensuring easy and repeatable ordering with and included functions like pre payment and a store finder. It did very well, becoming the highest rated app on Apple’s US App Store.
4) Get the nation talking
Chipotle’s initial ad was so successful that Chipotle started buying media around it. The ad was screened to about 6,000 movie theaters around the country and when they realized that they had a hit, they bought a spot during the Grammy awards and the ad went nationwide and made a total of 300 million PR impressions. The ad was also a hit within the advertising industry.
The reason why it worked so well because the ad provided a compelling story about the farming practices of its suppliers – an issue that was not easy to address. They used a less extreme way to raise awareness for something that people generally have an issue talking about.
5) Implement influencer marketing
Other companies paid an insane amount of money for celebrity endorsements because they believed that the publicity and image-boost from mentions about their product would justify the amount they were spending.
However, Chipotle was doing things a bit differently, whenever someone would mention their love for Chipotle, they would get sent a card that would entitle them to a free burrito a day, for life. They never asked for anything in return, but because it was a great deal, the recipient of the gift card would go onto social media to express their happiness.
The reason why this worked so well is because with no monetary exchange, customers believed that these influencers actually loved Chipotle when they mentioned the brand. Additionally, more people were getting excited about the fact that they could be a part of it. Chipotle adopted influencer marketing, but with an interesting twist. Anyone could be a Chipotle influencer.
6) Hosts free festivals and generates local buzz
Since 2011, Chipotle started hosting “Cultivate”, which was a series of free festivals that happened across America with live music, celebrity chef demonstrations, artisanal food, and activities to spread awareness about sustainable agriculture.
With these festivals were a wholesome, low-cost weekend activity for the people who attended. It was a good way for musicians and celebrity chefs to communicate with people and get them talking. Chipotle was able to promote their product indirectly by promoting the event.
7) Runs news column to spread its message
Chipotle started running a column on Huffington Post called “Food For Thought” that was dedicated to create awareness about how food is grown, raised and prepared and how it affects people.
The content in the column featured information from industry experts and knowledgeable consumers along with links to Chipotle’s other marketing efforts. By choosing to address an issue that matters to the general public, Chipotle was able to boost engagement with their target audience. This column it gave consumers even more things to talk about, while keeping Chipotle top-of-mind.
8) A controversial ad campaign
“The Scarecrow” was another one of Chipotle’s ad campaigns that tried to depict efforts to combat the industrial farming corporations by bringing sustainable food to the masses. The campaign did very well and generated over 6 million views and generated over 614 million PR impressions.
However, they got some backlash from agricultural and vegan communities who accused Chipotle of mocking farmers and reappropriating positive messages about the vegan lifestyle for marketing their own meat-filled burritos.
Like most of the other campaigns, this move encouraged consumers to talk about the issue of sustainable food. Despite the backlash Chipotle faced, the campaign generated massive publicity. The people who caused the backlash were the farmers and consumers who did not believe that Chipotle accurately represented them. The important thing to remember is that it is very possible to be misunderstood by using cause marketing.
9) Genuine online interactions
With 740,000 followers on Twitter and over 2.8 million likes on Facebook, Chipotle implemented social media marketing to get customers to think about where their food came from. Through the conversations they sparked, Chipotle was able to connect with their customers on a personal level and engage with them.
Chipotle’s SWOT Analysis
Since we are trying to look at Chipotle’s increase in digital sales, let us take a look at their SWOT analysis. Hopefully we can gain some insight into the competitive advantages that has allowed the company to achieve dominance in the industry.
- Provision of tasty food – Chipotle is well-known for providing customers with a simple, regular menu that began with oversized burritos and burrito bowls and later grew to include salads, tacos, and tortilla chips with guacamole.
- Classic method of cooking – They use classic methods of cooking their food with fresh ingredients and quality knives, pots and pans, and stoves and grills.
- High quality food – They use fresh ingredients guided by the philosophy of “Food with Integrity”
- Fresh food – They pride themselves on not having microwaves or freezers in their restaurants and they have walk-in fridges with fresh ingredients, herbs, spices, and rice, etc. They hand-make their fresh food like guacamole, lime rice, salsa from scratch every day.
- Reasonable prices – To keep their customers satisfied, they provide high-quality food make sure that this food is reasonably priced. The prices for their food ranges from $1.40-$8.00.
- Responsibly-sourced meat – Leveraging the public’s focus on sustainability and animal welfare, they insist on using animals that are “Responsibly Raised” without the use of hormones and other chemicals.
- Maintaining close relationship with suppliers– They insist on having close relationships with reliable suppliers so that they have a constant supply of high-quality fresh ingredients and ensure high levels of safety and quality at their restaurants.
- Digital friendly – To tie it all together, they are very digital-friendly and have introduced their ordering app to help customers get their food faster during lunch or dinner peak hours. You can order food on their app minutes before coming to the restaurant, cut the line, and pay for your food in a matter of seconds.
Image Credits: Apple App Store I Chipotle’s App Screenshot
- Dependence on the limited number of suppliers – Because Chipotle only uses a small amount of core ingredients, they rely heavily on their limited number of suppliers. While this supports their philosophy of quality and integrity, it can also lead to major controversy
- High sodium content – Health wise, Chipotle is known to have high sodium content in their food, which can lead to health issues like high blood pressure.
- Limited food items on the menu – For the die-hard Chipotle fans who know what they are getting, this is not a problem because they go there specifically for their burritos/burrito bowls and tacos. But people who want more variety would rather go to Chipotle’s competitors.
Image Credits: Statista
- Expansion into International Markets – They can try to expand their brand in the international market because while Chipotle operates over 2,452 restaurants in the US, they only have 37 in the international market.
- Digital orders – While they have done some digital marketing, there is a huge opportunity to expand their online orders (mobile, delivery and catering) because only 10.9% of Chipotle’s annual revenue comes from digital orders.
- Upgrade due to intense competition – The restaurant industry is upgrading constantly when it comes to casual dining, quick, and fast-casual service. This gives Chipotle the chance to upgrade its ambiance, condition, brand reputation, location, service, quality, and taste of the food they offer, among other things that go into successful company branding.
- Training and retaining top-performing employees – Chipotle can gain competitive advantage over their competition by retaining their top-performing employees. They can also ensure their employees keep performing well by investing in training new employees and providing a competitive salary.
- Drive-through options – While some stores have a drive-through option, adding this to all restaurants will provide convenience and ensure easy access for the customers, which will result in increased sales.
- Adding delivery service in partnership with Doordash – Creating a delivery program in collaboration with delivery apps will also allow them to retain more customers because they can provide free delivery for orders over $10, for example.
- Loss of customer trust due to food-borne illness – Between 2015- 2016, there was a decline in their sales because of a series of health – related incidents that ranged from norovirus, E.Coli, and salmonella outbreaks. Because of this, many customers stopped dining at Chipotle and they are only now slowly getting back to their previous sales percentages.
- Legal proceedings against Chipotle – False claims are never good, but in regard to Chipotle, their false claim that their food has a low calorie count affected the reputation of the brand.
- Challenges attracting and retaining employees – The labor market has been identified as being competitive because of the growing demand for dining in restaurant and the general strengthening of the economy. So, to bring in new workers, Chipotle implemented a one-day hiring binge.
- Supply chain problems – Because of the strict policies that were associated with the feeding and raising of animals, a number of store fronts had difficulties with the supply of certain ingredients.
- Growing competition – There has been a growing competition of Tex Mex business, which has put a pressure on Chipotle and has had negative effects on the company’s share of the market.
Image Credits: Statista
Chipotle has managed to survive mainly by improving on the efforts that they had implemented years before the pandemic hit. Their ability to understand what their consumers want is also equally important. They know that there are issues which they need to address so that they can remain relevant in the market through sustainable resources and their digital marketing strategy. Even with these gaps, what they have already done both physically at the store fronts and online has helped them to become a major powerhouse in stocks among other things.
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