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Chipotle to improve burrito offers to lure customers

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March 17
5:46 AM 2016

Chipotle, a US-based restaurant chain, is considering to improve certain food safety measures, which the company recently introduced after outbreaks of E.Coli pushed Chipotle's balance sheet into a gloomy condition. The restaurant chain, which has been battling to lure its lost customers, is anticipating to provide additional burritos as part of its marketing campaign.

Jack Hartung, chief financial officer, told shareholders that free-burrito offers have attracted many customers who are returning back to the restaurant chain. He said that the bridge between paid and free entrees has lessened over the recent period. The safety measures at the food chain have lured more customers, improving customer traffic to a fall of less than 20% in the previous week from a decline of more than 30% in January.

The Mexican-based restaurant chain recently changed its cooking methodology by precooking the beef outside its own restaurants. Moreover, the restaurant firm is also planning to eliminate DNA-based pathogen testing program on few food ingredients, sources with knowledge about the matter told THE WALL STREET JOURNAL.

Steve Ells, co-chief executive officer at Chipotle, said that the beef is cooked using the sous vide technique in order to lower contamination risk factor. He continued that Chipotle has examined many safety options to make its restaurant-stores the safest in the industry. However, Chipotle marinates the beef and heats it up within its restaurants before it reaches the customers' dish plate.

The company on Tuesday said that it expects to report a loss of $1 per share during the first quarter of 2016. Sales at Chipotle began to recover with a sequential rise in weekly same store sales from 8 February 2016 until March first week. However, weekly same-store sales started to fall during the second week of March as a store in Boston area was temporarily closed after a worker confirmed positive for norovirus.

According to Reuters, the restaurant chain is considering to give away nearly 9 million burrito offers to gain back its customers to offset the recent food safety incidents that have created a dip in its sales. Nearly 20% of Chipotle's sales come from loyal customers, who are the top gainers of this free food scheme. Chipotle's shares closed at $500.35, down 0.5% on Wednesday trading session.

February same store sales at Chipotle declined 26.1%, but still less than a 36.4% decrease in January. The restaurant chain expects operating margin to be in the mid-single digits during the first quarter. In addition, Chipotle hired James Marsden as the executive director of food safety measures. In his new position, Marsden will promote more safety measures to prevent illness breakouts in the future.

The company's sales were hurt by recent illness outbreaks, which forced Chipotle to introduce various offers to invite its customers.

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