More than two years since Chipotle's massive food-safety crisis dented both its reputation and stock price, the beleaguered burrito chain is starting to make a comeback.
With $1.31 billion in revenue and same-store sales growth, the restaurant chain beat analyst expectations in the first quarter of 2019. Its digital investments, including a new loyalty program and delivery and online order pick-up are also gaining momentum.
Business Insider talked with Chris Brandt, Chipotle's chief marketing officer, at the Cannes Lions Festival of International Creativity last week about why the company needed a cultural reset, how it has overhauled its media spending, how it manages relationships with agencies and consulting firms, and how it's preparing for a privacy-centric world. Here is an edited version of the conversation.
Tanya Dua: What has been your focus in the year that you've been on the job?
Chris Brandt: We needed to be more visible, more familiar and more relevant, without changing our core. Chipotle was struggling to attract new consumers and it needed a reset in terms of mentality and culture. We also moved the organization from Denver to Newport Beach to give it a fresh start.
Dua: Why did the company need a cultural reset?
Brandt: It had become a little staid. We also needed to add talent, and the talent pool in a place like southern California is a good place to start. I looked for people who are agile and innovative and have a ton of ideas, because the world is changing fast, and there's never been a more disruptive time in media and marketing than now. And you want people who view that as an opportunity, not as a problem. We've been playing defense for so long, it's nice to be on the front foot again.
Dua: How have you tried to win consumer trust back after the various food safety issues?
Brandt: Food safety was certainly always a big practice, but with the steps that we've taken in recent years, it is now a science at Chipotle. We don't need to apologize anymore. When you first have a problem, you come out and apologize and offer proof that you're making the fixes and guarantee people that things are going to be different. We felt like all of those things have been sorted, and it's time for us to move on. Instead of bringing it up, we have started celebrating what's special about us so that we can control the narrative.
Dua: How so?
Brandt: In the past few years, Chipotle had focused on the shortcomings of others, saying what other people don't do. We wanted it to be much more positive and tell the consumer what's great about us, not what's bad about others. We changed our tone in social and digital media. We went away from quirky and tried to be more culturally relevant. We still use humor, but we try to use more insights. We never had a tagline before, and were looking for one that few would dare to say, and fewer still could back up. And that's where "For Real" came from. That has gotten people to come back in.
Dua: Has that affected your media spend?
Brandt: The brand was very decentralized. It spent a bunch of money on promotions and those kinds of things. I pulled $20 million out of those promotions in the back half of the year [2018], and we reinvested the money in a much more efficient and effective way. It's about $150 million. It's a complete 180-degree turn for the brand.
We are now much more in the shows people talk about, in sports, in the things that shape culture. We were in college football, the NFL, in many shows' season premieres in September. We have also turned to digital, which has tripled our delivery business, but also grown our core business a lot.
Chipotle is preparing for a digital and privacy-centric future
Dua: How are you preparing the brand for a digital future?
Brandt: We asked consumers what would make you visit Chipotle more often and they said, "Why don't you have a loyalty program? Why don't you have an app? Why don't you give me more access, whether that's digital access via delivery, or mobile pick-up shelves?" We have really upped the digital piece. We launched a loyalty program in March. We launched with Venmo, which had only worked with one other brand until then, and that was Uber. We're lucky because almost 50% of our consumers are Gen Z or Millennials, and that's almost twice the index in the fast-casual category.
Dua: Is it working?
Brandt: We grew almost 2x in transactions in the first quarter of 2019, what most brands were growing just from price. And if you look around the first quarter earnings for most of the people in our segment, nobody was growing transactions. That gives us a lot of confidence that what we're doing is working — transactions are the best indicator of your brand health.
Dua: Is innovation going to be a focus?
Brandt: We've really upped the innovation pipeline, product and otherwise. We just did a Carne Asada test that's gone really well. We tested loyalty that way. We're building a new innovation center called "Cultivate Center" in Orange County that'll have a test kitchen, a studio, and some classrooms extolling our brand purpose, which is to cultivate a better world.
Dua: You've said that you want Chipotle to be a "purpose-driven lifestyle brand." Isn't the term overused?
Brandt: People have overused it, but I don't think it makes it less relevant. What I mean by a lifestyle brand is a brand that you want to be a part of, that you think fits in your life, and that represents you. We've had the purpose of cultivating a better world from the first day. Straws are less than 1% of our trash mix. On the other hand, the gloves that we use in the restaurants make up about 9% of the waste. So we're taking those gloves and working with a company that takes recycles them into trash bags, and those are the trash bags that go into our stores. That's what a purpose-driven lifestyle brand does. How are we making you feel good about eating at Chipotle?
Dua: You work with agencies and consulting firms. How do you navigate the advertising landscape with the lines between agencies and consulting firms blurring?
Brandt: Everybody's pitching everything. But there's always going to be a role for creativity, more so now than there in the past because it's so much harder to break through. And consulting firms are good at managing projects and getting stuff done, and they're trying to bring more creative, but that's not their jam. Deloitte [Digital] would not be my first pick for coming up with a new TV campaign.
One challenge some of the agencies have is that they're stuck to their legacy of making great TV spots, and that's getting less important. I've never understood the value of the big agency holding companies, either. They all have competing P&Ls.
Dua: How does the loyalty program, and having data and analytics close help you, especially now with all the talk of regulation and all the platforms moving toward privacy?
Brandt: Through the loyalty program, we have a more of a one-to-one relationship with you than through anything else. If I see that you come once a month, I can give you expanded incentives to come three times a month. I've got TV, social and digital, and I've also got the loyalty program where I can send you emails or text messages. Now I've got reach and frequency. It's very exciting. There's no ability right now for marketers to have cross-platform measurement of what's going on, but maybe through loyalty I can start to get it.
