Chipotle adds new loyalty program

Chipotle Mexican Grill is trying to save its lunch.

Once the darling of Wall Street, the fast-casual restaurant chain known for supersized burritos is crawling back from a series of food scares involving E.Coli and norovirus in 2015, and again last year, that cratered the company's stock price and hurt its reputation.

How bad was the hit? Comparable sales in 2016 fell 20.4 percent from the previous year.

This week Chipotle lured a new CEO from Taco Bell, and earlier this month announced it sopon will launch a loyalty program in which customers can earn free meals based on frequency of visits. There's a focus on customer enhancements such as a better menu and online ordering.

'Chipotle represents a unique (recovery) situation because the food safety incidents call into question the ‘food with integrity' mantra that its brand was built upon,” wrote Morningstar analyst R.J. Hottovy in an October 2017 report. 'We believe Chipotle faces a long road in rebuilding consumer trust.”

Chipotle boasts of using healthier and fresher ingredients than its fast-casual rivals such as McDonalds, but got clobbered with a food safety crisis of its own with multiple outbreaks of E. Coli, Salmonella and norovirus starting in 2015 that sickened hundreds of customers across about a dozen states. It temporarily closed restaurants and implemented strict health protocols to fix the problem.

The company spent all 2016 working on its issues, but suffered a setback last summer when the food safety concerns resurfaced.

Last July, a sick Chipotle employee caused a norovirus outbreak at a Sterling, Va., Chipotle. Multiple customers who ate there complained of nausea, vomiting and diarrhea, symptoms consistent with the highly contagious norovirus it dealt with two years earlier.

That same month, mice were discovered in a Chipotle kitchen in Dallas.

Given the company's recent history, 'We believe it prudent at this time to take a more cautious outlook about Chipotle's same-store sales and earnings trends,” wrote Nomura-Instinet restaurant analyst Mark Kalinowski.

'While progress has come more slowly than we would like, it's definitely not all doom and gloom,” Chipotle spokesman Chris Arnold said.

'We are making progress. Over the last year or so, we have put in place in place a number of food safety enhancements on the heels of the issues we saw in 2015 to put us on a path to meet the goal we set to be industry leaders in food safety.”

Arnold pointed out that Chipotle's 2017 revenue rose by nearly 15 percent over the previous year, and same store sales grew at a rate of 6.4 percent for the year. It also has helped to improve customer sentiment as measured by its internal brand health tracking study, and a recent survey from YouGov.

Arnold also cited changes to the board of directors. Two new officers were added, four new directors replaced the four who resigned, and a new CEO was just hired.

Effective March 5, Brian Niccol becomes the new CEO to replace M. Steven Ells - who also is founder and chairman of Chipotle. Niccol most recently served as CEO of Yum Brands's Taco Bell Division, where he helped lead the successful turnaround of that business.