It’s extra for guac?!
In these hard times, the food and beverage industry all over the world has taken a massive hit because of having to close their doors to limit the spread of the virus. Obviously because of this situation many restaurants that did not previously work with any delivery apps and pickup-only scenarios have done their best to stay in the market.
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 has realized that while at the beginning of this pandemic, consumers were getting groceries and cooking at home to save money. but now with stimulus money and tax refunds coming in, restaurants have found a solution for people that 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 their digital presence before the pandemic hit. It went beyond signing up for food-delivery apps and raising awareness, it also included tech-enabled make-lines in restaurants to handle increased volume, building pick-up shelves, and expanding development of drive-thru Chipotle locations.
Part of the reasoning why Chipotle has managed to stay afloat during this time is because of things that were already implemented before COVID-19. They had already strengthened many of its 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 obviously implemented increased sanitation of high-touch, high-trafic areas; provided masks for employees, and added tamper-evident packaging seals for off-premises orders. But, digital sales still remains a top priority for them and a major reason why they have managed to survive.
Chipotle’s Marketing Strategy
Chipotle has been a company focused on non-traditional advertising, it has tried to channel marketing efforts to create positive word-of-mouth advertising. Regardless of the minimal percentage of revenue spent on advertising, they have created interesting ways 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 to be successful.
- Gets customers to express their love for their food
- Produces web series
- Stays on your mind
- Get the nation talking about an important issue
- Implements Influencer Marketing
- Hosts festivals and generates buzz
- Runs news columns to spread it’s message
- Punished for being too successful
- Creates genuine online interactions with their customers
1) Gets 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, which was decided by retweets, likes, and shares, burrito themed haikus that the customers come up with.
While contests that revolve around consumer-generated content tend to not go very well, this contest actually went really well because:
- People tend to be proud of their creativity and are eager to share it.
- The contest metrics encouraged contestants to look for the supports of close friends and family.
- Many of the haikus created were quite funny and they only take seconds to read. Which would mean that: low time commitment + high entertainment value = shares.
2) Produces 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 protrays 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 by dedicating a large amount of effort towards production value would get audiences to appreciate the content more.
3) Stays on your 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 make it easier for customers to make orders and skip the lines would be beneficial for their business.
The app, designed by app developer Blue Rocket, tried to emphasize on 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) Gets 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 an issue that is not easy to address. They used a less extreme way to raise awareness for something that people generally have an issue talking about.
5) Implements Influencer Marketing
While other companies paid an insane amount of money on 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, they 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 actuallly loved Chipotle when they mentioned the brand. So, more people were getting excited about the fact that they could be a part of it.
6) Hosts free festivals and generates local buzz
Since 2011, Chipotle started hosting “Cultivate”, which was a series of free festivals that happened all throughout America with live music, celebrity chef demonstrations, artisal food, and activities to spread awareness about sustainable agriculture.
With these festivals being a wholesome, low-cost weekend activity for the people that attend, it was a good way for musicians and celebrity chefs to communicate with people and get them talking. They were able to promote their product 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 effects people.
The content in the column featured information from industry experts and knowledgeable consumers along with links to Chipotle’s other marketing efforts. The reason why this was a success was because, by choosing to back and be involved with an issue that is significant for people to discuss, it gives consumers even more things to talk, think, and discuss about and also bring up Chipotle.
8) Punished for success
“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 because they accused Chipotle of mocking farmers and reappropriating positive messages about the vegan lifestyle for it own meat-filled burrito marketing.
The reason why people talked about it was, like most of the other campaigns, it made consumers talk about the issue of sustainable food. The people that caused the backlash were the farmers and consumers that 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. They understood that every customer has individual personalities and no matter what they tried to get involved on a personal level and engage with them in genuine conversation.
Chipotle’s SWOT Analysis
Since we are trying to look at Chipotle’s increase in digital sales, let us take a look at its SWOT analysis and evaluate their dynamics and hopefully gain some insights to its competitive advantages that has allowed the company to achieve dominance in the industry.
- Provisions of tasty food – Chipotle is well-known for providing customers with a simple, regular menu that began with oversized burritos and burrito bowls and slowly adding salads, tacos, and tortilla chips with guacamole.
- Classic method of cooking – They use classic methods of cooking and preparing their food that involves fresh ingredients, cutting knives, pots and pans, and stoves and grills.
- High quality food – They use fresh ingredients by promoting “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, and meat every day from scratch.
- Reasonable prices – To keep their customers satisfied, they provide high-quality food and making sure that the food is reasonably priced. The prices for their food ranges from $1.40-$8.00.
- Responsibly-sourced meat – With there being a large 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 their reliable suppliers so that they have continually acquire high-quality fresh ingredients and ensure high levels of safety and quality at their restaurants.
- Digital friendly – To tie it all in, they are very digital-friendly and have introduced their ordering app to help customers move quicker 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 Screeshot
- Dependence on the limited number of suppliers – Because Chipolte only uses a small amount of main ingredients, they rely heavily on their limited number of suppliers. While it benefits their idea 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 that know what they are getting, this is not a problem because they go there specifically for their burritos/burrito bowls and tacos. But for the others that want more variety, they would go and spend more time in their competitors’ outlets.
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 its 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, which 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 a successful company branding.
- Training and retaining top-performing employees – Chipotle can gain competitive advantage over their competition by retaining their top-performing employees and it can be ensure by investing in training new employees, providing a competitive salary, etc.
- Drive-through options – While some stores have a drive-through option, adding them to all restaurants will provide convenience and ensure easy access for its customers, which will obviously 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 overs 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 struggled and has been identified as being tightened 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 their 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
By continuing and improving the efforts that Chipotle had implemented years before during this pandemic is the main reason they have managed to survive, while other businesses have suffered. Their ability to understand the things that their consumers want is also equally as important, they know that there are issues that they need to address so that they can remain relevant in the market through sustainable resources and their digital marketing strategy. What they have done both physically at the store fronts and online has caused them to be a major powerhouse in stocks among other things.