Chipotle is starting a new customer loyalty program on Friday, running through summer, in its effort to recover business after food-poisoning outbreaks that sickened hundreds of people. Revenue was down more than 20 percent in the first quarter this year, compared with a year ago, and restaurant sales were down almost 30 percent.
One recovery strategy? The Chiptopia card. Doesn’t exactly roll off the tongue, but Chipotle is hoping this new loyalty rewards program gets more customers rolling into its stores. In general, these programs are very effective, Kelly Weikel, director of consumer insights at Technomic, said.
“We keep seeing new brands entering the space and other brands continually updating what they’re offering to keep pace and improve the value proposition for customers,” she said.
At least 40 percent of consumers expect restaurants to have some sort of loyalty program, according to Weikel. So the best ones break through the noise.
“I think that differentiation is really important as these become more and more common,” she said.
Lars Perner, who teaches marketing at the Marshall School of Business at USC, said Chipotle should be careful not to seem like it’s trying too hard.
“Say a free meal every third time, or something like that,” Perner said, “that comes across as too much.”
Chipotle is requiring four visits a month to get a free meal. Eat there more often, and you get bigger rewards. Perner says research shows people can see through overly generous rewards, and they feel manipulated.
Wagner dos Santos, vice president of strategy and insights at the Orlando marketing firm Bigeye, said it takes a lot of work to regain trust. And for Chipotle, he said, a loyalty rewards program “may be a little premature.”
He said the company might work on rebuilding loyalty before it expects loyalty in return.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.
Give today and get our limited edition tote.