• May 26, 2022

A Year After Food Scare, Chipotle Has A Whole New Problem

Things are still looking sour at Chipotle: In the most recent quarter, sales were down a staggering 22 percent at restaurants open more than a year. Investors have sent the stock down some 22 percent so far in 2016. These troubling figures help explain why the company announced this week that co-chief executive Monty Moran was departing the company, clearing the way for its other co-chief executive, Steve Ells, to execute a singular vision to revive the business.

Against that backdrop, it’d be easy to assume that Chipotle’s troubles simply reflect a need to put the food safety scare behind it. But actually, on a Monday conference call with investors, executives acknowledged that something more concerning may be turning diners off.

“The data, everything that we have, suggest that there are not large numbers of customers staying away from Chipotle because they feel like either we didn’t address the problem properly or that they are afraid of Chipotle,” said Mark Crumpacker, the restaurant’s chief marketing and development officer.

Instead, the company is having trouble getting the basics right: Throughput is down, meaning customers are facing frustratingly long lines. The dining room tables and drink stations are often a mess. And patrons are constantly finding that the burrito assembly line is out of an ingredient or two.

In other words, it seems the core source of Chipotle’s difficulty right now is convincing people it is enjoyable to eat at Chipotle – a remarkable turn of events for a company that was not long ago the darling of the industry for its seemingly unstoppable sales growth.

 Ells offered investors a frank diagnosis on Monday of the company’s problems: Restaurant employees’ time had become too consumed by overly elaborate job interview processes. And their training focused too much on soft skills and not enough on the nuts and bolts of making the restaurant run smoothly.

“Over time, we started to make running our restaurants more and more complicated. And on occasion, we lost sight of what really mattered: our customers,” Ells said.

Executives estimate that about half of Chipotle’s 2,100 locations are coming up short on customer service. That can take shape in a variety of ways. For example, long lines have always been the top pain point Chipotle’s diner surveys. But lately, some of that waiting around has been attributable to slower throughput. The company regularly measures how many customers can make it through the line in a 15-minute time window, and chief financial officer John Hartung said that it is currently “well off that mark” of what it was hitting one or two years ago.

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