Next Stop: Chiptopia

By: Kayleigh Yerdon, Cornell University *image from Fastcompany.com

Ever heard of Chiptopia? Until Monday, we hadn’t either. But, in these coming summer months, it seems that Chiptopia may be a popular destination for many adventurous travellers. So, where is Chiptopia and what exactly is the appeal?

Strangely enough, Chiptopia can be found at a very familiar location – your local Chipotle restaurant. In a press release on Monday, the burrito chain announced its newest venture, naming it “Chiptopia” – a three-month trial period for a customer loyalty program. The plan itself is a strategy that the Mexican fast food chain had previously decided never to begin. However, after a string of bad press and consumer distrust, Chipotle has decided to give customer loyalty programs – that have recently worked well for companies like Starbucks – a go.

It is no secret that Chipotle has suffered in the past year. The popular burrito chain faced two separate outbreaks of the E. Coli virus in its food, the most recent outbreak beginning in December of 2015. While the two outbreaks appear to be over, the resulting press from the widespread sickness is not. The first outbreak left customers from eleven states hospitalized, and the second hit another three states. Ultimately, for investigative purposes, many Chipotle restaurants temporarily shut their doors – especially in both Washington and Oregon, where the outbreaks were largest.

While the two outbreaks were officially declared over by February 1st of this year, the bad news for Chipotle didn’t stop then. At the end of April, the chain reported its first quarterly loss in history. This was largely due to same-store sales, which fell almost 30 percent in the first quarter of 2016. The chain also missed revenue expectations and each of its shares lost 88 cents in the quarter alone. Since October, Chipotle’s stock has lost more than a third of its value. So, in what can only be called Chipotle’s worst year to date, there’s no doubt that the company’s sales and marketing teams have a lot of work to do to correct the fall.

That’s where Chiptopia comes in. The program is aimed not only to reward Chipotle’s most loyal customers – because, even after hearing the news of the E. Coli outbreak, some customers were faithful enough to continue buying food and taking their chances – but it is also a strategy to lure customers back after the obvious, recent distrust for the brand. Unlike other rewards programs, Chiptopia is designed to reward customers for the number of times they go to Chipotle stores in the next three months – not the dollar amount that they purchase. For loyalty, customers will get “freebies” like free chips and guacamole (that’s right people, FREE guacamole), as well as buy-one-get-one burritos. If the three-month trial is successful, Chipotle management has stated that it will consider lengthening it into an ongoing rewards program.

Do you think Chiptopia can help out Chipotle’s stock price? Can strategies like this help rebuild consumer confidence surrounding the brand? Information like this may help you to make more informed investing decisions or, at the very least, you could end up in Chiptopia with some free guac.