Chipotle Attempts to Recover From E Coli PR Disaster: A Case Study
Between the months of October and December, 2015, 60 cases of E Coli poisoning linked to Chipotle were reported to the CDC from 14 different states. This event was immediately picked up by trade associations and mainstream media creating a PR crisis for Chipotle that they are still reeling from today.
The event severely damaged consumer confidence and made even the most fervor Chipotle brand loyalist question their claim of fresh, safe ingredients. The knock to consumer confidence lead to a massive drop in Chipotle sales and stock price. Chipotle immediately tried to mitigate risk with public appearances and later launched a full force marketing and PR campaign with the goal of recovering from the massive crisis. Chipotle Mexican Grill is an American fast-food restaurant chain with a mantra of using fresh and high quality ingredients. Chipotle was founded by Steve Ells in Denver in 1994 and became a public company in 2006. Chipotle now has over 2000 stores in operation globally.
The campaign never publicly released their research regarding who they were targeting for their recovery campaign but it can be safely assumed that their main target were disaffected customers who stopped purchasing Chipotle products after the E Coli outbreak. Again, there was no concrete research available on the demographic and psychographic profiles of disaffected customers but based on an analysis of the situation a mini profile can be created of this target.
Since Chipotle’s E Coli outbreak was a health crisis, customers who value their health and quality of food consumed most likely significantly reduced their Chipotle purchases. Chipotle brand loyalist were the least likely to reduce or eliminate their Chipotle purchases meaning infrequent and less loyal customers were more likely to be affected by the crisis. Finally, Chipotle customers that had easy access to other fast-food alternatives were more likely to replace Chipotle with a competitor, where customers without many other options were more likely to stick with Chipotle.
The target audience was appropriate considering that their decreased consumption of Chipotle directly resulted in tens of millions in sales losses. Regaining the trust of the disaffected consumers was crucial to re-establishing confidence in the Chipotle brand. Chipotle perhaps should have segmented their audience more based on demographic trends and focus on the publics that were most affected.
It is difficult for any organization to use research when reacting to a crisis situation so it is understandable that Chipotle didn’t use much research in the first few days of the campaign. In the immediate aftermath of the crisis, it seemed that Chipotle used tactics from past PR crises to guide their response to the situation. Once some time had past, Chipotle had time to gather research and it certainly appeared that they used it to launch promotional campaigns and rewards programs to boost brand loyalty and create incentives for Chipotle purchases.
There were numerous public opinion surveys carried out by mainstream media and trade publications that showed the widespread impact of the crisis. Additionally, there were dozens of business and media influencers that weighed in on the situation and Chipotle’s response. Chipotle never directly cited the surveys or influencer but public opinion definitely shaped their campaign.
Chipotle’s biggest concern and what they wanted to accomplish with their campaign was to bring consumer confidence and Chipotle restaurant sales back to pre-crisis levels. Completing these primary objectives would allow Chipotle to meet their secondary objectives of increasing overall profits initiating a resurgence of their beaten down stock price.
A couple hypothetical measurable objectives for Chipotle’s campaign could be:
● Raise 2017 restaurant sales by 20% over 2016.
● Raise positive brand sentiment by 25% among the target audience by end of 2017.
Over the course of the campaign Chipotle emphasized different messages. Initially, Chipotle communicated the message of apology and caring. Steve Ells publicly apologized on multiple public outlets and emphasized how much he cared about the issue. Simultaneously, Chipotle closed down more stores than necessary and stressed the message that they were being overly cautious and took the issue very seriously. Hand in hand with that, Chipotle announced an overhaul to their food safety and testing procedures and claimed that their safety procedures were the most rigorous in the industry. In fact, Ells said that Chipotle was “embracing this as an opportunity,” effectively trying to spin the crisis into a positive. They continued the message of food safety throughout the campaign. More recently, Chipotle launched numerous promotional events along with a major Summer rewards program with the message being that Chipotle rewards loyal customers.
Overall, their messaging has been effective. They certainly focussed on the right issues of apology and food safety initially which were customer’s main concerns. Chipotle’s messaging has been effective enough that they have started to see signs of recovering with an increase in sales in their most recent quarter.
It seems that messages of apology and food safety were met somewhat skeptically by the target audience who felt like it was too little too late. It was hard for the target audience to believe that Chipotle has the highest safety standards in the industry when such a massive outbreak just occurred. While those issues were met with some skepticism, Chipotle’s message of rewarding loyal customers resonated with the target audience well, giving the target audience confidence that Chipotle really does care about their customers.
Chipotle’s strategy was to initially take ownership of the incident and express their extreme apologies and concern over the situation . Concurrently, Chipotle’s strategy was to be overly cautious and emphasize food safety through all the extra measures and practices they were putting into place. Later down the road Chipotle developed the strategy of rewarding loyal customers.
Three Chipotle tactics:
● Chipotle used their founder and spokespeople to publically apologize and take ownership of the crisis on mainstream news outlets. They implemented transparency with the press and responded to all press communications and inquiries.
● Chipotle emphasized commitment to food safety by implementing new rigorous testing programs. They promoted communication of their new programs through popular news networks, social media and press releases.
● Chipotle developed promotional events and awards program to increase incentives and consumption among target groups and encourage brand loyalty. They promoted these initiatives using social media, paid and earned media.
Chipotle utilized every element of PESO in this campaign. For Paid, Chipotle advertised their food safety measures and rewards program through paid social media, tv commercials, online ads, billboards, promotional events and rewards program. For Earned, Chipotle used public comments by Steve Ells and spokespersons to get attention on tv new networks, online journals, blogs, trade publications, radio shows, podcasts and social media. For Social, Chipotle used their social media channels to promote related news, promotional events and rewards program. For Owned, Chipotle used their press releases and website to frame the conversation and inform various publics on the current situation with Chipotle.
Chipotle used a few interactive elements to engage with publics in this campaign. First was the Guac Hunter promotion which gave users a coupon for free chips and guac upon completion of a game on their website. The second was Chipotle’s massive rewards program that users could interact with in store, online and through mobile.
Since Chipotle’s campaign is still in progress it is a little difficult to measure results. However, Chipotle’s investor financial statements can be used to get estimates. For example, in April Chipotle announced a decrease in comparable restaurant sales by 29.7%. In July, only a quarter later, Chipotle announced a decrease in comparable restaurant sales by 23.6% . While Chipotle’s sales are still down over 20% from where they were a year before that in July, the sales decrease was 6.1% less than what it was only a quarter earlier. This marks a 6.1% increase in sales between quarters. Chipotle next reports financials in the end of October and they believe the upwards trend of sales will continue.
Chipotle’s communication with their target audience was effective for the most part. They were proactive from the start of the crisis and overall were transparent with their various publics. They targeted messages that were relevant to the target audience like food safety and rewarding brand loyalty.
Chipotle’s campaign was successful since they were able to contain the situation and not make it worse than it already was. Financially, it is a little early to tell how successful this campaign has been but there are several indications that the campaign has begun to improve restaurant sales and consumers are starting to come back.
To improve the success of Chipotles campaign, they could have launched their promotions and rewards program earlier. It seemed that those tactics have been the most effective and Chipotle waited months before rolling them out. Additionally, when initially responding to the crisis, there was a little bit of miscommunication between Chipotle Spokespeople who placed blame on the CDC which rubbed consumers the wrong way. Chipotle could have done more to control the story in the very beginning by addressing all the concerns and announcing the introduction of promotions and rewards.