Despite top officials having previously claimed that Chipotle’s free burritos drive have helped sales, a letter uncovered by Bloomberg from Chipotle to the Securities Exchange Commission states that the company is unable to measure whether any profits have actually been made thanks to the drive.
Last January, Chipotle was at the center of a major food scandal; 60 customers contracted E Coli after eating at Chipotle locations across 14 states. As a result, Chipotle found itself being sued by a large collection of customers and saw its sales plummet.
To win back customers, Chipotle began offering customers free burritos through a coupon code deal:
Customers who visited the site simply had to text Chipotle which responded with a code for a free burrito within a few days. It also launched a rewards program which allowed customers to earn free chips and burritos.
Analysts predicted that Chipotle gave away approximately $70 million in free food coupons from February to May.
Did It Actually Help?
Jack Hartung, Chipotle’s CFO had claimed back in March that “Free burritos – turns out it works. It brings people into the restaurants.”
However, in the recent letter, Chipotle has said “Promotional offers of free food do not directly impact revenue. Furthermore, given the unusual sales trends resulting from the food borne-illness incidents, we were unable to calculate or accurately estimate any indirect impact that promotional activity had on revenue.”
In short, Chipotle may need to change their strategy to win back consumers and revenue.