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Simply put, Chipotle (CMG - Free Report) is in a slump. The E. coli issue that plagued a handful of its restaurants last year sent hordes of loyal customers fleeing to competitors. Now, it looks like many of those customers might be gone for good.
Shares of the fast casual Mexican chain have fallen over 17% on the year, and on Tuesday the stock hit its lowest point in three years. In the first quarter, the company reported its first quarterly loss in history, and it’s obvious that Chipotle is at a major turning point.
If Chipotle wants to bounce back soon, something has got to give. Although the brand’s rise in popularity can at least partially be attributed to the simplicity of its menu offerings, Chipotle has to do something new to get customers back in the door.
With that said, we brainstormed some ideas about how Chipotle can get its groove back. Here’s what we came up with:
New Menu Items
As I said before, Chipotle needs to get customers back in the door, and one way to do that is to offer something new. Just a quick glance at Chipotle’s competition shows that the company is lagging behind on its menu offerings.
For example, Jack in the Box’s (JACK - Free Report) Mexican chain Qdoba has a devoted following thanks to its queso. Coming in both mild and spicy, Qdoba queso is available for no additional charge on any of its menu items. I mean, c’mon Chipotle. What kind of self-respecting Mexican food restaurant doesn’t have a queso option?!
In the most recent Harris Poll awards announced last week, Chipotle lost its tag as the most popular fast-casual Mexican brand after holding the crown for three consecutive years. In fact, Chipotle fell in fourth behind Qdoba, Yum! Brands (YUM - Free Report) owned Taco Bell, Baja Fresh, and the winner, Moe’s Southwest Grill.
As a heads up to Chipotle, Moe’s offers bacon as a topping and Baja Fresh serves fish and fire-grilled shrimp. I understand that Chipotle has made a name for itself with its current menu, but it’s time to start trying new things.
It does appear that Chipotle has at least recognized this fact. Just over a month ago the company announced that it was expanding its chorizo option to more restaurants around the U.S.
Slimmer Options
Along those same lines, Chipotle needs to look at ways to slim their menu down. I don’t mean reduce the amount of options; I mean offering healthier, lower-calorie versions of their dishes.
Last week, Chipotle stock took a hit after the release of a new study that showed it may not be the healthy option many of its customers think it is. While Chipotle boasts about its organic and natural ingredients, that doesn’t necessarily mean that its dishes are “good for you.”
In fact, the study from the University of South Carolina found that fast-casual chains like Chipotle and Panera Bread serve entrees that can average up to 35% more calories than traditional fast-food companies like McDonald’s (MCD - Free Report) or Taco Bell.
An easy fix for this issue is for Chipotle to offer a smaller portion size option. Moe’s already serves “junior” sizes of its burritos, and it seems like Chipotle could easily implement a lower-calorie menu that simply made its dishes smaller.
Promotions
Back in February, Chipotle offered all of its customers a free burrito as an apology for the food safety issues. In the short-term, free giveaways and promotions cut into profits, but they can be an effective way of getting people to be return customers.
Chipotle needs to do more of this. Again, it will hurt for a bit, but a random free burrito giveaway or a “Taco Tuesday” promotion will serve to remind everyone that Chipotle’s food is delicious and safe, and they should definitely come back and eat again.
Bottom Line
To any Chipotle executives that may have read this article: you’re welcome. I humbly offer all of these suggestions to you for free, but shoot me a message if you want to hook it up with some coupons. All jokes aside, these ideas are just common sense ways to shake things up, which is something I think we can all agree Chipotle needs to do as soon as possible.
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How Chipotle (CMG) Stock Can Get Its Groove Back
Simply put, Chipotle (CMG - Free Report) is in a slump. The E. coli issue that plagued a handful of its restaurants last year sent hordes of loyal customers fleeing to competitors. Now, it looks like many of those customers might be gone for good.
Shares of the fast casual Mexican chain have fallen over 17% on the year, and on Tuesday the stock hit its lowest point in three years. In the first quarter, the company reported its first quarterly loss in history, and it’s obvious that Chipotle is at a major turning point.
If Chipotle wants to bounce back soon, something has got to give. Although the brand’s rise in popularity can at least partially be attributed to the simplicity of its menu offerings, Chipotle has to do something new to get customers back in the door.
CHIPOTLE MEXICN Price
CHIPOTLE MEXICN Price | CHIPOTLE MEXICN Quote
With that said, we brainstormed some ideas about how Chipotle can get its groove back. Here’s what we came up with:
New Menu Items
As I said before, Chipotle needs to get customers back in the door, and one way to do that is to offer something new. Just a quick glance at Chipotle’s competition shows that the company is lagging behind on its menu offerings.
For example, Jack in the Box’s (JACK - Free Report) Mexican chain Qdoba has a devoted following thanks to its queso. Coming in both mild and spicy, Qdoba queso is available for no additional charge on any of its menu items. I mean, c’mon Chipotle. What kind of self-respecting Mexican food restaurant doesn’t have a queso option?!
In the most recent Harris Poll awards announced last week, Chipotle lost its tag as the most popular fast-casual Mexican brand after holding the crown for three consecutive years. In fact, Chipotle fell in fourth behind Qdoba, Yum! Brands (YUM - Free Report) owned Taco Bell, Baja Fresh, and the winner, Moe’s Southwest Grill.
As a heads up to Chipotle, Moe’s offers bacon as a topping and Baja Fresh serves fish and fire-grilled shrimp. I understand that Chipotle has made a name for itself with its current menu, but it’s time to start trying new things.
It does appear that Chipotle has at least recognized this fact. Just over a month ago the company announced that it was expanding its chorizo option to more restaurants around the U.S.
Slimmer Options
Along those same lines, Chipotle needs to look at ways to slim their menu down. I don’t mean reduce the amount of options; I mean offering healthier, lower-calorie versions of their dishes.
Last week, Chipotle stock took a hit after the release of a new study that showed it may not be the healthy option many of its customers think it is. While Chipotle boasts about its organic and natural ingredients, that doesn’t necessarily mean that its dishes are “good for you.”
In fact, the study from the University of South Carolina found that fast-casual chains like Chipotle and Panera Bread serve entrees that can average up to 35% more calories than traditional fast-food companies like McDonald’s (MCD - Free Report) or Taco Bell.
An easy fix for this issue is for Chipotle to offer a smaller portion size option. Moe’s already serves “junior” sizes of its burritos, and it seems like Chipotle could easily implement a lower-calorie menu that simply made its dishes smaller.
Promotions
Back in February, Chipotle offered all of its customers a free burrito as an apology for the food safety issues. In the short-term, free giveaways and promotions cut into profits, but they can be an effective way of getting people to be return customers.
Chipotle needs to do more of this. Again, it will hurt for a bit, but a random free burrito giveaway or a “Taco Tuesday” promotion will serve to remind everyone that Chipotle’s food is delicious and safe, and they should definitely come back and eat again.
Bottom Line
To any Chipotle executives that may have read this article: you’re welcome. I humbly offer all of these suggestions to you for free, but shoot me a message if you want to hook it up with some coupons. All jokes aside, these ideas are just common sense ways to shake things up, which is something I think we can all agree Chipotle needs to do as soon as possible.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>