Chipotle's next marketing move

A steak burrito with a drink and bags of chips at a Chipotle Mexican Grill Inc.
Patrick T. Fallon | Bloomberg | Getty Images
A steak burrito with a drink and bags of chips at a Chipotle Mexican Grill Inc.

A run-in with foodborne illness has some Chipotle Mexican Grill diners dashing for the door. The chain's young, health-conscious customer base means transparency is the only way forward, experts told CNBC.

"There are two strategies a restaurant can incorporate," said Darren Tristano, president of consultancy Technomic. "The first is to promote the efforts made to avoid it in the future: acknowledge, apologize, remind customers that they are being diligent. That's the approach Chipotle has taken.

"That reminds customers about what happened. The alternative strategy is to not address it and let customers forget about it."

Indeed, Chipotle's food safety website lists numerous changes to its food preparation in response to the recent outbreaks, including washing and dicing tomatoes in a centralized location, and testing raw meat, cheese and sour cream before restocking restaurants.

"Right now, our highest priority is implementing all of the components of our enhanced food safety program," Chipotle spokesman Chris Arnold told CNBC on Wednesday. "We are moving very quickly on that and will share more information through marketing and communications outreach as things continue to develop."

The moves come at a time when more than 50 people nationwide have become ill from E. coli strains linked to Chipotle.

Some 50 percent of CNBC readers have stopped eating at Chipotle because of the E. coli outbreak, according to an unscientific poll of almost 20,000 people.

In fact, just 13 percent of respondents said they would consider Chipotle the next time they ate at a restaurant, according to a YouGov BrandIndex report released before the latest Centers for Disease Control and Prevention investigation.

Bank of America Merrill Lynch analysts Joseph Buckley and Gregory Francfort expect a 25 percent decline in same-store sales in the month of December, according to a recent note.

With a shifting marketing landscape and Americans more health-conscious than ever, Chipotle should push to be even more transparent in coming months, according to Kit Yarrow, a consumer psychologist, and her husband Russ, a public relations expert and consultant.

First, Chipotle needs to determine the source of the outbreak. She then suggested the company have an inspection and endorsement from a credible outside authority, and a video that can show consumers what in the supply chain has changed.

Chipotle, of course, isn't the first restaurant to experience a foodborne illness outbreak. But the company's "calculated, slick, sophisticated" image, partnered with the immediacy of social media, makes it different than any previous incident, said Andrew Alvarez, an industry research analyst specializing in food and hospitality at IBIS World.

"Because the company has given itself this branding as being the right choice for conscious eating, they are one of the few [quick-service restaurant] chains that has been able to maintain this coveted notion that to eat there is the right, healthy choice," Alvarez said. "As a result, Chipotle has fallen harder because of what we have come to expect. The fun, smug, worry-free mindset has come to look arrogant among some consumers."

Constant coverage of the outbreaks has upped the ante even more for Chipotle's public presence, Alvarez said. He pointed to McDonald's "Our Food, Your Questions" campaign, a response to the "pink slime" debacle that some perceived as tone-deaf.

"With social media, you have to be on point," Alvarez said. "The Internet can be critical and unforgiving."

McDonald's was an early investor in Chipotle before selling its stake in 2006.

Today's environment draws a sharp contrast to another notorious E. coli outbreak, at Jack in the Box, which bounced back thanks in part to an advertising campaign featuring fictional founder, Jack, launched by Secret Weapon Marketing.

Given the new media landscape, Chipotle is right to focus more on public relations than advertising, said Gene Grabowski, partner at kglobal, a Washington, D.C., communications firm.

"Right now, what Chipotle should be doing is focusing on getting food safety squared away," said Grabowski.

Grabowski has dealt with more than 160 food recalls, and he said that as long as people still associate Chipotle with foodborne illness, advertising would be a waste of money.

"They need to publicize what they are doing to correct the problems," Grabowski said. "Once that has been shared, then you do your marketing. PR creates a brand, advertising just reinforces it."

As the food-to-fork movement continues to gain traction, experts said Chipotle's response will write the playbook for future outbreaks that may result from the trend toward of fresher, less-processed cuisine.

"We used to have large, national, brands, like Tide and McDonald's," Grabowski said. "Today, it's about the cult of support ... I think [Chipotle will] have to stick with their game plan and do what they do best. There's a way to improve it. But they should not run from the natural ingredients. That is their differentiator."