Chipotle is a well-known success story…created a new place in the market with good food designed for a specific audience. But their story isn’t quite as rosy today as it was a few years ago…changes have happened and now they need to make some adjustments. But are they making the right adjustments or are they missing a huge opportunity? I believe they are missing an opportunity…here’s why.
There was a recent article in Adage where they talked about the challenges Chipotle was having today…lower revenues in the 3rd quarter and slowing of sales in existing locations. As they face some challenges, they are focusing on at least half the answer…they are significantly reducing their marketing
In the article, “Chipotle Deliberately Spends Less on Marketing to Afford Higher-Quality Ingredients,” their Chief Creative and Development Officer Mark Crumpacker said…
“We deliberately spend less on our marketing so we can afford these higher-quality ingredients. That’s essentially the main marketing benefit to our customers. We have recently shifted our focus more to telling the basic story about where our ingredients come from and how they’re made.”
So what are they betting on to win this battle and come out on top?
They are betting on a commodity…and that is dangerous territory. They are betting on providing better ingredients or as they call it, “Food with Integrity.” While that might sound great on the surface and a good bet, it’s still a commodity. All their ingredients and products are commodities. What happens when someone else comes up with slightly (or significantly) better ingredients or a better recipe using the ingredients? Unless there is something else to the Chipotle story, they could lose.
While the audience today thoroughly enjoys Chipotle food, they could just as easily be gone tomorrow if someone enters the market with something even better or more attractive to their target audience. Then what…do they go out and try to “one up” them and come up with even better ingredients and food…and at what cost? This is a never ending cycle in the commodity world and one that is very tough to compete in and win consistently and over long periods of time. Unless you are unquestionably the very best and can offer it at the lowest price, you are subjected to “commodity wars.”
So what is the opportunity they could capitalize on and avoid being a commodity?
Their CUSTOMER EXPERIENCE…this is the opportunity they are missing. Rather than investing in a commodity, why not invest in their customers and in themselves…not ingredients and products. They have established a great market presence (especially among millennials) and reputation for their food. They have a great following today. Now is the time to strike! Now is the time to significantly enhance the total offering…great food and an awesome customer experience. They have a solid foundation and a step up on the competition…now is the time to take Chipotle to the next level.
What if they were to create an unparalleled customer experience today, right now, to go along with their solid reputation and quality products? Would they need to keep searching for different ingredients and competing solely on these products if they offered the most incredible experience to their target audience? I don’t think so…they could carve out a niche which combines an amazing experience with great food and win. Today they have a solid experience…but it isn’t awesome, incredible, remarkable, or WOW.
Not putting their marketing funds back into their customers via the customer experience is a lost opportunity. They already have word-of-mouth working for them…why not put it on steroids through their social channels and get their audience raving about them? Why don’t they create a WOW, incredible, remarkable, and memorable experience with high quality ingredients and food? This combination could put them in an entirely new place, somewhere they could compete well above their competition. This is a combination that would get talked about, shared, and spread…word-of-mouth on steroids.
And based on the research, an awesome customer experience is not easily copied and is one that can endear a customer to you for a very long time. It also gets talked about more than products or ingredients. It becomes your differentiator…it becomes your new word-of-mouth. It allows you to invest in your customers and create something that can’t be taken away by another fresher ingredient that might show up tomorrow.
It would put Chipotle in a completely different place…one that changes the game for them and their customers…and would, I wager, drive higher revenues than more focus on ingredients. I hope they are reading and listening…I would love to see them be even more successful and hang around for a long time.
