Chipotle's new plan: Give away more free food

Chipotle's new plan includes giving away free food
Chipotle's new plan includes giving away free food

There's a silver lining for Chipotle lovers amid the chain's woes: their next Chipotle burritos could be free.

As Chipotle battles ongoing fallout from a string of high-profile foodborne illness outbreaks, the chain is increasing the amount of food it gives away to customers.

The restaurant chain has doubled the amount of free food stores can give away to customers, said co-CEO Monty Moran during an in-person interview Wednesday at the ICR conference, a closely watched investment conference that attracts retailers and restaurateurs.

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While the practice has existed at the company since the "old days," it had diminished, said CFO Jack Hartung during an interview. "We've always had it, but it just kind of drifted to such a low-grade level that it was kind of non-existent."

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Recently though, the company sent an email out detailing just how much restaurants could increase their giveaways and reward customers, Hartung said. Moran declined to share the specific allowance.

Starting next February, the chain also plans to ramp up marketing in hopes of winning customers back, said Chief Marketing and Development Officer Mark Crumpacker in a presentation.

Chipotle’s Troubles
Chipotle’s Troubles

A former Wall Street darling, Chipotle has seen both its stock price drop precipitously and its sales nosedive at established restaurants. In December, comps plummeted 30 percent while its stock is down more than 40 percent from all-time highs hit last year.

But on Wednesday, Chipotle stock jumped following updated comments to investors and analysts from the company at the ICR conference. Analysts attributed the uptick in part to positive comments from the company about a potential end to the CDC's E. coli investigation and upcoming promotions to get customers back.

"I have confidence that we're going to recover from this," said co-CEO Steve Ells, during a conference presentation.

Hartung pegged the ongoing margin hit from additional costs of food safety improvements to be about 100 to 200 basis points.

While Chipotle will eventually recoup some of its costs through a price increase, Hartung said this would not happen until probably 2017.