×

Chipotle has 'painted a bull's eye on its back' with queso launch

  • While Chipotle could see a bump in sales and foot traffic after the national launch of its queso, it seems that repeat visits and sales could be hard to come by for the brand.
  • Despite negative Twitter reviews, Chipotle has stood by its decision to launch the product nationwide, citing positive feedback during trials on the West Coast.
  • "If they want to be consumer focused and say that they are responsive to consumers that would also include being responsive when consumers are displeased," Dan Hill, CEO of Hill Impact, told CNBC.
Chipotle Mexican Grill Queso.
Source: Chipotle Mexican Grill
Chipotle Mexican Grill Queso.

Despite backlash from customers, Chipotle Mexican Grill is standing behind its queso — and that could be a big mistake.

"I think their statements about the queso have been peculiar," Dan Hill, CEO of crisis communications firm Hill Impact, told CNBC. "They are not very consumer friendly and it's almost like 'We know better than you about what you want and need,' which is a certain arrogance that a brand can have that doesn't sit well with people."

While the burrito chain is slated to see a bump in sales and foot traffic after the national launch of the cheese dip, it seems that repeat visits and sales could be hard to come by for the brand, analysts said.

"I think they'll get a bump out of the queso roll-out in the short-term, but the growth won't be sustainable or long-lived if the consumers don't like it, and indications are that it's a far cry from what they were expecting, and it could end up being a long-term negative if it doesn't live up to the hype," David Henkes, principal at Technomic, told CNBC via email.

In initial tests in Colorado and California, Chipotle's queso received tepid reviews, especially on Twitter. And that continued following its national rollout. Many said that the dip had a "grainy" texture while others applauded its smokey taste.

Chipotle has stood by its decision to launch the product nationwide, citing positive feedback during trials on the West Coast.

Company spokesman Chris Arnold told CNBC that 93 percent of diners who ordered queso on an entree during the tests on the West Coast said that they "liked or loved" the product. In addition, he said 76 percent of customers who ordered queso as a side with chips "liked or loved" it and 63 percent of respondents who tried the new menu item said it made them more likely to visit the restaurant more often.

However, Chipotle's "fundamental mistake" was the way that it launched its queso, Gene Grabowski, a partner at K Global, a crisis communications group, told CNBC. Grabowski said that because of the company's history with food safety outbreaks and its recent history of setbacks, customers and investors are more apt to scrutinize and criticize the brand.

More so, since Chipotle does not often launch new menu items, expectations are much higher when it does.

The company "painted a bull's eye on their back and invited people to take shots," Grabowski said. "You have no place to go but down when you announce it with trumpets and rose petals."

Grabowski said the company may have been more successful if it rolled out its queso more slowly and with less publicity. Of course, this can be difficult for the brand because of how much attention is paid to every move it makes.

The company needs to have better communication with its "front line," the employees that are interacting with customers every day, and needs to change how it approaches its consumers, Hill said.

In an email to employees obtained by Bloomberg last week, Chipotle's chief marketing officer, Mark Crumpacker, told staff that despite the most recent online reviews, customers do like the company's queso.

"I think that's a mistake, trying to force an organization to accept that it made the right decision in the face of information that says otherwise," Hill said. "If they want to be consumer focused and say that they are responsive to consumers that would also include being responsive when consumers are displeased."

Grabowski said that Chipotle's crisis management is "a little better" than it once was and that the company has learned a few lessons from its food safety struggles. However, he said that the company is still acting impulsively. He suggested that Chipotle find something else to talk about and let the narrative change away from queso.

"The franchise wasn't built on cheese," he said.