Best case Chipotle: how to overcome the Covid-19 crisis?

Like its competitors, American burrito giant Chipotle Mexican Grill was forced to close its restaurants in mid-March, offering only takeaway and delivery service.

Following the latest developments regarding the Coronavirus in France and the May 11th decontamination, some restaurant chains, such as Mcdonald's and Burger King, are reopening their click and collect and drive-thru services . With quarterly sales boosted by online orders, Chipotle Mexican Grill has managed to limit the damage caused by the crisis and anticipate the recovery. With a mix of communication and operational tricks, the burrito and taco fast-food specialist has emerged stronger from the crisis. With 3 orders placed every second in France, we wanted to know how this high-end American fast-food chain, specializing in Tex-Mex cuisine, managed to overcome the covid-19 crisis!

I) The origins of Chipotle: a strong concept

An American success story

In the 90s, Steve Ells, a young American academic, noticed that taquerias - eateries specializing in tacos that could also serve other Mexican dishes - were proving very successful. His original plan was to open a few Mexican restaurants and then launch a more gourmet restaurant. The young entrepreneur calculated with his father that, to be profitable, he needed to sell a minimum of 197 burritos a day. In 1993, Steve Ells opened a single restaurant in Denver, Colorado. After just one month, the young man had succeeded in his gamble, selling over 1,000 tacos a day. The founder and former executive chairman of Chipotle then opened a second restaurant. Once again, success was not long in coming, and Steve Ells decided to continue the adventure: his few restaurants became a veritable fast-food chain - Chipotle Mexican Grill - now available in every corner of the world.

As of March 31, 2020, the company had over 2,600 restaurants in the United States, Canada, the United Kingdom, France and Germany. It is also the only restaurant company of its size that owns and operates all its restaurants. With over 85,000 employees, Chipotle Mexican Grill has long been a leader and innovator in the food industry. The fast-food chain is committed not only to making its food accessible to all, but also to becoming a brand at the cutting edge of digital, new technologies and sustainable business practices.

A responsible concept and a carefully crafted identity

Chipotle Mexican Grill offers its customers 7 meal choices: Burrito, Burrito Bowl, Crispy Corn Tacos, Soft Tacos, Salad, and Kid's Menu. For almost every dish, the customer is king and can choose the ingredient of their choice: meat, starch, vegetables, and different sauces. Chipotle's teams were quick to realize that food transparency was a strong point with consumers! The restaurant chain therefore decided to display the calories for each ingredient not only on its website, but also on its in-store menus. Customers can calculate not only the calories in their order, but also the weight of protein, fat, cholesterol...

The fast-growing company adopted the slogan "food with integrity" to describe its approach to sourcing and preparing ingredients. On a daily basis, Chipotle prepared all food fresh on-site from raw ingredients, which were sourced from producers using sustainable and humane practices. According to the brand, the meat served comes from animals raised in proper conditions, while GMOs are banned from their recipes. "We serve products that taste good while respecting the food chain: no battery-raised chickens here. We maintain a close relationship with our suppliers. In Paris, we buy from Rungis. By building a solid brand image and expressing its positioning, notably with the "cultivate a better world" campaign, Chipotle Mexican Grill has succeeded in building a lasting relationship with its customers. Over the past two years, head of marketing Chris Brandt and his team have successfully implemented Chipotle's digital transformation, necessary to compete with rival brands such as Burger King or McDonald's. Helping to restore trust in the brand, ensuring that food safety and fresh produce were no longer an obstacle but a point of difference, Chipotle's teams were able to adapt to the Covid-19 crisis that emerged in early March 2020.

II) Chipotle between responsiveness and operational ingenuity

Controlled sales decline in the face of Covid-19

Chipotle has not escaped the damage caused by Covid-19 since March. The chain's sales fell by 16%, reaching a 35% drop in the week of March 29. One of the reasons for this was that the fast-food chain had to temporarily close around a hundred restaurants, mainly in shopping malls and shopping arcades that attract large numbers of customers. But these closures represented only 3.8% of the company's total number of restaurants. The remaining Chipotle establishments offered takeaway and delivery services during the lockdown. For these restaurants, Chipotle took the commercial decision to offer free delivery to all customers who placed orders over $10, which ultimately weighed on profitability, but continued to increase sales despite the mid-March headwind. As a result, Chipotle recorded a 3.3% increase in sales for the quarter as a whole. As a result, Chipotle Mexican Grill shares climbed 34% in April, according to data provided by S&P Global Market Intelligence - an American company specializing in financial information and analysis. So, how did Chipotle manage to maintain its business during this health crisis? What resources and actions did the company deploy to survive?

Leveraging digital technology

To overcome this crisis, the fast food chain specializing in Tex-Mex cuisine, has directly consolidated its online ordering and delivery tool. Launched in 2018, the benefits of this tool have proved considerable. By rapidly ramping up its delivery and takeaway activities during the pandemic, Chipotle Mexican Grill achieved 81% growth in online sales in the first quarter of 2020 - which accounted for 26% of the chain's total revenue. Most of this leap occurred in March, when the global economy came to a standstill. The fast-food chain not only limited the damage, but also set a new online sales record, with sales of $372 million enabled by its various digital tools! In France, Chipotle adapted directly by collaborating with Deliveroo, one of the best-known delivery platforms, to offer a quality delivery service.

What's more, in addition to offering meals to caregivers during this difficult period for everyone, Chipotle has implemented several digital communication operations: new digital campaigns, virtual events, partnerships on social media, hashtag campaigns... the fast-food chain has been able to leverage its online presence and strengthen its reputation in the midst of the crisis!

III) Tailor-made communication during the health crisis

The launch of new high-value recipes

After conducting a survey in collaboration with YouGov, Chipotle Mexican Grill concluded that around a third of Americans were finding it difficult to stay in good physical condition during this period of confinement, and that 36% of them had increased their consumption of fast food and other fatty and sugary products. In response to these bad habits, the Mexican restaurant chain has launched five new bowls. Dubbed "Lifestyle Bowls", these healthy menus have been designed with the confined person in mind. In order to offer the most complete recipes possible, the Mexican fast-food chain sought the advice and ordering preferences of five "wellness" influencers.

Sold for between $9 and $12, the recipes for these new products were created by two athletes, a cycling instructor, a basketball coach and a nutrition expert. But the operation doesn't stop there! The various influencers involved in their development appeared on the Chipotle Together Wellness Live-Stream on Instagram Live. This feed, designed to encourage customers to stay at home and work out, helps them maintain their fitness levels.As a result of this initiative, the company's shares have almost returned to the level they reached just before the pandemic, and are currently trading 6-7% below their February 20 peak of around $927.

A successful collaboration with the video game Call of Duty Warzone

Chipotle has entered the virtual sports ring with its new Chipotle Challenger series. Since April 30, a number of famous e-sport players have been competing in teams. The top eight teams, chosen from previous qualifying rounds, will have the opportunity to compete against Chipotle-fan players in the fields of sport, music and entertainment. Professional athletes, DJs and other esport-therapy veterans are also expected to make an appearance.

Winners will take home a year's supply of Chipotle burritos and around $25,000. The event, dedicated to fans of the Warzone game and Chipotle, was also aimed at all those condemned to stay at home by the coronavirus. More than $25,000 in donations were raised.

The organization of a virtual end-of-year ball

A forerunner and innovator when it comes to digital techniques within social media, Chipotle Mexican Grill has teamed up with influencers and other brands to create an event for high school students whose annual traditions have been cancelled due to Covid-19.

The fast-food chain is looking to bring joy and normalcy to students who miss out on important milestones in their school experience. With a special Instagram and Snapchat filter and lens, participants will be able to create content for the brand. A win-win event, since students attending the evening will have the opportunity to take part in a competition organized by the brand, with the chance of winning a $25,000 scholarship!

A special May 5th commemoration promotion

On May 5, "Cinco de Mayo" celebrates Mexican heritage and pride. This typical holiday commemorates the victory of the forces of the Mexican Republican government at the Battle of Puebla in 1862. In the midst of a period of confinement, Chipotle took advantage of the occasion to launch a clever communication operationfrom April 30 to May 10 .On May 5, and only on that day, any order between $10 and $200 placed using the code "QUESO55" not only received free delivery, but also their famous cottage cheese sauce, which had disappeared from their menu for some time. The reappearance (and free delivery!) of the brand's flagship ingredient has caused quite a stir on the networks!

In parallel, the fast-food chain specializing in tex-mex has launched the #ChipotleSponsorMe challenge on TikTok with youtuber David Dobrik. David will award a Chipotle celebrity card to five fans who show why they should be sponsored by Chipotle on TikTok. The winners will be the first Chipotle fans to receive the famous "celebrity card". Held by a small group of celebrities, athletes and influencers, the card gives access to free Chipotle products. To enter, fans had to follow @Chipotle on TikTok, use #ChipotleSponsorMe and #contest, then post a creative TikTok video about why Chipotle should sponsor them.

In a nutshell,

Chipotle Mexican Grill seems to be weathering the current crisis with flying colors. The restaurant chain has recorded zero debt and sales comparable to normal times. The dip caused by the pandemic in mid-March is a long way off for Chipotle's teams. Thanks to operational tricks and communication coups, Chipotle has demonstrated its ability to survive the coronavirus crisis, and will undoubtedly emerge even stronger.