By Mae Velasco, Associate Editor
When you're all the way at the top, you have a much harder fall. Chipotle, a brand known to be the face of fast casual, the poster child setting the tone for fresh ingredients at the ultimate convenience, hit the rocks in late 2015 with two words: E.coli. Since then, Chipotle has had a rough road to recovery.
"Even before the crisis, we were losing our edge in terms of what it takes to run a great restaurant, and we're getting that edge back," Chipotle CFO Jack Hartung said to CNBC. "We were successful, and so, you know, success sometimes gets in the way of seeing reality, and the reality in our case was we focus on culture, which is a great thing. Of course, you need a great culture. And we still value our people. We value a special culture. But we emphasized culture over and above the customer, and over and above great training."
With this reshifting of priorities and a renewed energy for their practices and marketing, will Chipotle finally break out of its 2015 E.coli outbreak crisis?
While February showed that profits were down by 76 percent, Chipotle's sale grew for the first time since the E.coli food safety issue by the end of April this year. This growth coincided with Foodable Labs data, as well, which revealed that Chipotle exhibited positive movement from January to March this year, with an overall improved performance over the course of the last six months. Let's dig deeper and take another bite at Chipotle's turnaround success.
How the Data Works
Foodable Labs analyzes more than 167,000 restaurant and hospitality brands daily and more than 220 million global restaurant consumers engaged in social media across over 500,000 foodservice locations. There are five key metrics that Foodable Labs looks at, providing brands with not just big data but big data with context. They are:
- Sentiment, which is measured beyond a positive-negative-neutral analysis, analyzes consumer and operator sentiment on food, service, and overall brand experience.
- Influence is based on the impact of the brand's general and hyper-users.
- Engagement refers to the brand engagement within the brand's direct inner and outside community, as well as social audience growth and the brand's effectiveness at reaching that audience.
- Social Restaurant Visits (SRV) are actions users take on a social platform referencing a restaurant's location in the post or within the post's geo-metadata (such as a mention, photo share, or check in), all in relation to their engagement on social versus in-store traffic.
- Mobile, which analyzes user-brand engagement across major social networks, can help brands determine which tactics perform better on mobile versus a desktop.
All of these scores together make up a brand's Overall Score.
"Foodable Labs works from five metrics that include SRV, Mobile, Engagement, Sentiment, and Influence. While some companies put a lot of research based on sentiment alone, we have proven that the complete digital analysis of brands has proven itself as a predictor of things to come," Foodable CEO Paul Barron said. "We currently measure over 250 sub-metrics that we believe are the source to understanding sales impact up or down for a brand."
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Chipotle's Overall Foodable Labs Score (Last Six Months)
In the beginning of May, Chipotle's overall score hit a high of 435.91, finally reaching back to its former glory when it scored high on Foodable Labs in Q1 and Q2 of 2015, at 435.43 and 446.11 respectively. Chipotle continued to persist in its stronghold in Q3 2015, scoring 428.58. However, after the E.Coli outbreaks became a PR nightmare, Chipotle had a dramatic fall in its overall score, plummeting to 388.88 in Q4 2015 — an alarming near 40-point drop in just one quarter.
This clearly demonstrates the impact of consumer sentiment and the slow, painful recovery brands must undergo after a food safety crisis, as Chipotle hit even lower scores throughout 2016, even as low as 358.92 in November 2016, a year after the outbreaks began. However, while it seemed like Chipotle would never get back on its feet and that fast casuals no longer saw this former fast casual king as a threat, it seems as though Chipotle has been making its slow crawl and steady rise in the last six months reported.
"Chipotle's comeback has been on a slight trend up since as far back as November of 2016, but January to March of this year showed the most overall improvement of guest traction from a brand and visit frequency standpoint. They are still facing some market pressures from competitors that have claimed some of their most valuable customers, but early indications show Chipotle is winning a good portion of them back," Barron said.
"At the present rate of increase, our data model shows that Chipotle is set for another sales performance increase in Q3. The one thing that could affect this, of course, would be any political or economic impact that is unforeseen at this time," he added.
Chipotle's Overall Scores Leading Up to E.coli Outbreaks
Chipotle's Overall Scores Recently After E.Coli Outbreaks
Reviewing Consumer Sentiment
Sentiment Scores Leading Up to E.coli Outbreaks
Sentiment Scores (Last Six Months)
Consumer sentiment is the bloodline of a brand. It doesn't matter how well-equipped a restaurant or talented a team is when it comes to operations or technology — if customers don't love and eat up what you're serving, you can kiss your chance at staying in business goodbye.
Leading up to the E.coli outbreaks, Chipotle had a high sentiment score of 95.11 in Q2 2015, before it began to fall to the 70s, dropping a drastic 20 points in the chaos of food safety concerns. All throughout 2016, Chipotle floundered, reaching only as high as 78.21 at one point — only a mere shadow of its former success — and falling as low as 67.82 in January this year. However, there has been steady growth from January on. What contributed to turning this ship around?
Is laughter really the best medicine and did Chipotle's comedic ad tactic pull through? Did Chipotle's first-ever dessert sweeten the rotten memory of 2015? Was it its short film retelling the brand story Chipotle wanted consumers to remember? Or was hiring former Arby executive Scott Boatwright to oversee restaurant operations the "wright" move?
Many factors, good and bad, pushed Chipotle's sentiment score up and down a crazy two-year roller coaster, but PR experts agreed that Chipotle would come out of its crisis alive and was handling it the best way it could.
Other Notes on Chipotle's Growth
Influence Scores (Last Six Months)
- Chipotle's influence scores from November to May had the highest positive growth, jumping just over 22 points.
- This suggests that the brand is resonating strongly with its users, building up engagement with general and hyper-users.
- Perhaps happy teachers shared the May BOGO promotion for Teacher's Appreciation Day, adding to the spike.
Engagement Scores (Last Six Months)
- Overall, engagement increased by almost 14 points from November to May.
- This metric exhibited the second-highest growth after influence.
- Could the negative news regarding Chipotle's data breach cause this metric to fall in upcoming months? Could this increased engagement come from the news regarding that data breach?
Mobile Scores (Last Six Months)
- Chipotle proved fast casual could get even faster in late February this year — the wait time for the brand's digital orders were slimmed down by 50 percent.
- Although Chipotle has had an app since 2009, it recently acquired "Smarter Pickup Times" Technology, which could have contributed to higher mobile engagement.
Social Restaurant Visits Scores (Last Six Months)
- Chipotle's SRV score increased about 10 points the last half year.
- Its positive growth in engagement, influence, and mobile all play a part in the relationship between consumer location-based actions on social platforms in reference to in-store foot traffic.
- With a rise in all other metrics, this suggests more guests engaged with the brand on social platforms, and translated that into actual visits.