Chipotle hatches food giveaway to win back customers

After a rocky relationship with customers, Chipotle is trying something new to win them back. Keleigh Nealon (@keleighnealon) has the story. Buzz60

Chipotle Mexican Grill is hoping some free food will help it win back some mojo with some of its most valued customers.

The chain is launching a "Chiptopia" summer promotion starting Friday that rewards customers for their number of visits. At its lowest level, diners who buy four burritos or other entrees get a fifth one free.

The promotion is only the latest of several big deals in recent months for Chipotle, which has been scrambling to regain loyalty from former fans after alienating many with several incidences of E. coli and Norovirus at stores last year. Those food safety scares sent same-store sales tanking nearly 30% in the first quarter. In its attempt to recover, the company gave away more than 6 million burritos or burrito bowls earlier this year, and has offered buy-one, get-one deals.

"This is all about getting the customers who used to be the most frequent — who went there 25 times a year — back the restaurant and eating," says Matt McGinley, analyst for Evercore ISI.

The program also shows that fast-casual eateries like Chipotle are willing to get creative to compete against fast-food chains, which have undergone rampant discounting lately.

Chiptopia is one more change Chipotle has made in the wake of its reputation slip — it overhauled its food safety standards, appointed an executive director of food safety and brought on several food safety consultants. The summer promotion may not be temporary either.

"We are exploring options for a longer-term rewards program, so it is certainly possible that those benefits will extend beyond the summer months," says company spokesman Chris Arnold.

From July to September, qualifying purchases of at least $6 before tax can elevate Chipotle customers to three possible status levels — mild, medium and hot. The more often they visit, the more the rewards pile up.

Further incentives, or "bonus rewards," are available for customers who reach status levels for all three months. At the highest level, Chipotle diners who maintain "hot" status for three months could earn up to nine free meals and receive catering for 20 people, valued at $240.

Not all analysts are sure it will work in getting Chipotle back on top of the restaurant game.

"We believe that this promotion does not offer much for the larger population of less frequent Chipotle customers," said Stephen Anderson of the Maxim Group in a note, "and that the company may need to take additional promotional measures in the coming quarters to bring these customers back."

Contributing: Chris Woodyard and Hadley Malcolm

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