The Hustle

Chipotle’s new CEO is making a stale burrito app-etizing again

After years of rotten sales growth caused by food safety scares, Chipotle defied expectations and increased quarterly earnings 8% to $1.3B. Driven by increased app usage, Chipotle’s success shows that catering to buying behaviors can be as important as catering...


July 31, 2018

After years of rotten sales growth caused by food safety scares, Chipotle defied expectations and increased quarterly earnings 8% to $1.3B.

Driven by increased app usage, Chipotle’s success shows that catering to buying behaviors can be as important as catering to palate preferences.

A big turnaround after Chipotle stock almost went rancid

Debuting in a 2006 IPO that the WSJ described as “spicier than a three-alarm hot sauce,” Chipotle’s share price soared from an IPO price of $22 to more than $758.49 at its high point in 2015. 

But a pesky little bacterium named E. coli caused Chipotle’s stock to spoil, dropping as low as $251 per share. 

After struggling to rebound for years, the company hired a new CEO named Brian Niccol — a famous fast-food fixer who favorably flipped financial fortunes at Taco Bell.

Is the turnaround working? App-solutely.

Chipotle’s app launched in 2009, but it was an afterthought until last year when the company invested millions in a digital ‘turnaround.’ 

But after Chipotle made improvements ranging from an easier user-flow to a second digital-only burrito assembly line in stores, the number of app users has increased 65% since this time last year. 

Most importantly, the ‘rito rollers managed to increase the popularity of their app without subsidizing in-app orders.

Calling a burrito restaurant a lifestyle brand may sound ridiculous…

But Chipotle’s success suggests otherwise. Chipotle’s CMO recently announced plans “to make Chipotle not just a food brand but a purpose-driven lifestyle brand.” 

While skeptics balked — focusing on the uncertain long-term benefits of “‘lifestyle’ marketing ploys” — lifestyle branding like Chipotle’s also benefits businesses in the short term. 

Thanks to the recent revamp, 10% of Chipotle’s sales are made in-app, just slightly lower than Starbucks (13%). But while Starbucks lures customers to its app with discounts, Chipotle attracts them organically.

So by building a lifestyle brand that encourages natural engagement without relying on perks, Chipotle reduced both the cost of recruiting customers to its app and the cost of keeping them there.

UPDATE: The good news didn’t last long…

Just hours later, local news outlets reported that at least 368 people had gotten sick after eating at a Chipotle in Ohio.

Then, the company’s app crashed in the middle of a guac giveaway on National Avocado Day, prompting an apology as Chipotle scrambled to fix it.

Either way, we doubt a streamlined app will matter to the hundreds of people with the runs…

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