The worst of Chipotle's woes may be behind it — but the burrito chain still has plenty of work ahead to persuade diners to come back to its stores.
After what CEO Steve Ells called the "most challenging [year] we've ever faced in our 23-year history," sales at the chain's established stores turned positive in December for the first month in more than a year. They had been in a downward spiral since last October, when news broke about its highly publicized E. coli outbreak.
Chipotle investors welcomed the news,sending shares up nearly 5 percent Tuesday.
With comparable sales now trending in the right direction — albeit off a 30 percent decline in the prior-year period — Chipotle's management laid out its plans to continue growing these revenues next year, while saving $100 million in costs.
The strategy was outlined Tuesday at the ICR Conference in Orlando, Florida.
Here are five ways the company plans to reel in more customers.
One of Chipotle's founding principles was simplicity. But as its operations grew, so did its complexity.
Under its previous strategy, employees were rewarded for how well they performed against 27 measures — most of which were not related to serving the customer, Ells said. That led to complaints about slow lines and dirty stores.
Now, the chain is telling workers to focus on five strategies, three of which relate directly to customer service.
"These relatively simple changes are making a big difference," Ells said.
The company is also making changes to its hiring process, which previously required all members of a store's team to meet every candidate. While well-intended, that policy often pulled workers off the food service line at peak hours.
It was also time-consuming, as an average 17 candidates were interviewed for each open position. And because the process took an average five days, Chipotle lost some labor to competitors.
Even as Chipotle has made progress attracting new customers, it's struggled to bring former diners back into its stores. The chain is targeting some 60 million customers who have either stopped visiting its restaurants or go infrequently. It will also launch a scripted TV series for kids, focused on real ingredients.
Though the company plans to spend less on marketing and promotions as a percent of sales, it will run ads more consistently throughout the year, Chief Marketing Officer Mark Crumpacker said.
Group visits to Chipotle have mostly returned, thanks to a lift in online orders and catering. But fundraising events are another way the company can attract large chunks of customers at once, management said.
An added bonus: 40 percent of customers who come in for a fundraiser haven't been there in six months.
New menu items will not be a significant driver of Chipotle's business, as they can add complexity to its operations and slow down the line.
However, the chain is testing a dessert item that adds only one ingredient not already found in its stores. If the secret menu item gets the green light, it would be released in the spring.
Chipotle may also test some higher prices, CFO Jack Hartung said.
Chipotle has been tweaking its online ordering technologies, and will start promoting these easier-to-use tools next week. The campaign follows its launch of more accurate pickup times, which rolled out across more than 1,000 shops in December. The remaining 1,000-plus Chipotle locations will get this capability in the first quarter.
By narrowing the pickup window — and trimming the amount of time it takes to put together online orders — the stores that have rolled out this upgrade have seen a lift in visits to its website. These stores have also turned more digital visitors into buyers.
Remote orders account for roughly 7 percent of Chipotle's sales, and could lead to an additional 130 orders being made in an hour without any extra labor, the company said.