McDonald's and Panera among restaurants benefiting from Chipotle food-safety woes

  • Chipotle Mexican Grill's food safety issues gave customers a reason to try other restaurant brands.
  • Some 22 percent of customers polled online by UBS said they ate Chipotle less often because they liked other quick-service options better.
  • Despite the burrito chain's efforts to lure back diners, customer perception of the brand remains tarnished.
Chipotle restaurant workers fill orders for customers on April 27, 2015 in Miami, Florida.
Joe Raedle | Getty Images
Chipotle restaurant workers fill orders for customers on April 27, 2015 in Miami, Florida.

Chipotle Mexican Grill's food safety woes are still not behind it, and that's good news for other restaurants.

Despite the burrito chain's efforts to lure back diners, customer perception of the brand remains tarnished and has led them to seek out other food options.

"Food safety issues likely gave customers a reason to try a new brand or return to more mature brands," UBS analyst Dennis Geiger wrote in a research note Thursday. "Particularly in markets where many new and attractive choices exist, it may be challenging to entice prior customers to return or return with the same frequency after experiencing new concepts."

Geiger found that 22 percent of more than 1,600 customers polled online by UBS said they ate Chipotle less often because they liked other quick-service options better. This was the second-most-cited reason for customers ditching the chain behind food safety concerns.

While traditional QSR chains are not typically viewed as Chipotle's direct competition, food safety issues gave customers a reason to try other brands, Geiger said.

McDonald's received the most benefit from Chipotle's troubles, with 30 percent of respondents reporting that they visited the burger chain following food-safety incidents.

"Chipotle is a case study in what happens when a brand loses the trust of its consumers," David Henkes, principal at Technomic, told CNBC via email. "The market is too competitive right now, and consumers have so many choices, that once that bond is broken, it's hard to get consumers back."

Taco Bell, Panera and Subway were also listed as brands that likely gained visits from lapsed Chipotle customers. Geiger said that Chipotle also likely lost customers to smaller, regional fast-casual concepts that offer similar food quality and experience.

"A further issue is the price," Neil Saunders, managing director of GlobalData, told CNBC via email. "As the number of offers and deals in fast food have increased, Chipotle has become a relatively more expensive option. That would be fine if quality was seen as good and the menu interesting, but when those elements are missing, it creates a poor value for money perception."

Some 22 percent of customers polled by UBS said they ate less at Chipotle because it was too expensive.

In mid-January, Chipotle completed its last wave of price hikes, raising costs by 5 to 7 percent in its remaining markets that did not already see increases in 2017. Prior to the first price hike in April last year, Chipotle had not raised prices at any of its locations since mid-2014.

Another 6 percent of respondents called out Chipotle's lack of new menu items. The burrito chain has struggled to create meaningful menu additions, ditching chorizo a little over a year after it launched the new protein. Consumers have also had a tepid response to the restaurant's addition of queso.

"Despite some menu changes and attempts at innovation, the Chipotle offer is seen as the same and dull by a large number of consumers, this has reduced visit frequency and spend," Saunders said.

Chipotle is set to report fourth-quarter 2017 earnings after the bell on Feb. 6.