Free burritos, transparent food safety improvements, loyalty incentives — none of these attractive initiatives seem to be able to resuscitate Chipotle’s tanking sales. Since the fast-casual chain’s E.coli and norovirus problems last fall, Chipotle has reported three straight quarters of double-digit same-store sales declines. In its second-quarter financial results released last month, Chipotle announced that same-store sales were down 23.6% from last year and that net income decreased 81.7% to $25.6 million, compared to $140.2 million in the prior-year period. The results are a slight improvement over Chipotle’s first-quarter financials, but the former fast-casual darling has a long way to go in its attempt to fully revive consumers’ brand trust.
Technomic’s Consumer Brand Metrics (CBM) data, which tracks customer restaurant sentiment, illuminates how far Chipotle really fell from consumers’ good graces. In the first quarter of last year, the chain was in third place for brand trust; by the second quarter of this year, it had tumbled down to nearly last place compared to 88 other limited-service restaurant brands. Of all of Chipotle’s CBM attribute rankings, it came up the shortest for positive brand image this quarter, indicating that brand image is highly correlated with brand trustworthiness.
According to CBM, the top five most-trusted brands today are In-N-Out Burger, Chick-fil-A, Firehouse Subs, Culver’s and Raising Cane’s Chicken Fingers. Digging deeper into CBM data reveals that four of these same five chains are the highest rated for overall brand image, and the fifth is still among the top 15 best rated. Beyond trustworthiness, other key attributes contributing to a brand’s image include customer service, memorable advertising, a positive reputation, social responsibility and a similar value system to the customer.
In-N-Out Burger’s greatest strength rests in its reputation (i.e., cult following), while Chick-fil-A widely appeals to Christian consumers with its faith-based values. Firehouse Subs is praised for supporting community activities, and Raising Cane’s is considered highly trustworthy due to the consistency and selectivity of its menu offerings. Lastly, Culver’s stands out for putting the customer first, likely because it brings the food out to the table after customers place their orders at the counter, which is fairly unusual among QSRs.
AS I SEE IT, these brand trust rankings demonstrate that brand image has strong implications for brand performance. According to Technomic estimates, the five highest-ranked brands for brand trust all saw year-over-year sales growth in 2015, with Culver’s, Raising Cane’s and Firehouse Subs experiencing double-digit increases. For Chipotle, regaining consumer trust is essential to improving sales. Chipotle is particularly struggling because its core brand message is one of health, ethical sourcing and transparency, which are at odds with the recent food safety crisis. Chipotle will need to become an industry leader in food safety. Each location will need to place very high levels of emphasis on food handling and avoid any contamination. Consumers have proven to be very forgiving, but rebuilding trust is especially important for a brand focused on food with integrity.
Note: This content originally appeared in the August 2016 issue of Technomic’s Foodservice Digest newsletter