Chipotle May Turn to National TV Ads, Desserts for Recovery and Growth



Chipotle’s nightmarish decline in the wake of its food-safety issues is nowhere near over. So the brand is turning to still more unprecedented steps, including expanding its menu to add desserts and even trying national TV advertising, which has been rare in its history.

All of its attempts to recover from last year’s E.coli and norovirus outbreaks have proven unsuccessful for Chipotle, including food giveaways to teachers, the summer’s Chiptopia loyalty program, and another online video campaign against its traditional fast-food competitors.

Chipotle just reported that same-store sales fell a worse-than-expected 22 percent during the third quarter, while profits declined by 95 percent. Just a year after Chipotle was continuing to outperform most other QSR and fast-casual rivals and stood atop the segment as a wonder to everyone, now practically every other chain in the widely battered sector outperformed Chipotle’s performance during the third quarter, according to USA Today analysis.

“While we’re on the road to recovery, we’re not satisfied,” Chipotle CEO Steve Ells told investors this week.

That’s likely a huge understatement, so Ells also outlined some new initiatives aimed at speeding Chipotle’s balky recovery. They include consideration of national TV commercials to widen its audience and the study of new menu items, including desserts.

Chipotle famously and stubbornly has stuck to a very limited menu for much of its 23-year history, and it seems obvious that the brand’s brain-trust might consider broadening the menu a bit as they seek a solution. It’s a tactic that practically every other restaurant chain uses, but until recently Chipotle has felt that doing “food with integrity” trumped the mere addition of menu items.

One such gambit already seems to be working for the chain: chorizo sausage as an option in burritos and other items already accounts for 7 percent of sales after its recent rollout.

Meanwhile, Chipotle will make its fulfillment of online food orders more efficient, install order-taking tablets in its restaurants so customers can bypass the lines, launch new mobile-ordering technology, use a cheaper design for new outlets, and slow restaurant openings in 2017 to between 195 and 210, down from the 220 to 235 targeted for next year.

And in an attempt to regain its relevance with younger audiences, Chipotle recently launched a weekly show on Snapchat, called School of Guac.

The company also plans to shutter its ShopHouse Southeast Asian Kitchen brand, which has 15 locations in three markets, while promising to continue other concepts such as Pizzeria Locale and Tasty Made burgers. The first store of the latter brand opened on Thursday in Ohio.