Yesterday, RB wrote about the latest Harris Poll Reputation Quotient rankings, in which Chick-fil-A was found to have one of the best reputations among the 100 companies ranked.
But the rating might have been more revealing when it comes to Chipotle Mexican Grill. It finished last among the six restaurant companies listed, with a “fair” ranking of 67.69 out of 100.
The results show the Denver-based burrito chain and its new CEO, Brian Niccol, have a way to go to get back into customers’ good graces.
It’s important to note that all consumer surveys can be imperfect. And the Harris Poll RQ survey only measures 100 companies as determined by survey respondents—meaning that companies rated come and go from one year to the next.
In this instance, Chipotle has only been listed among those 100 companies for the past three years, which could mean that the chain was top of mind for many consumers in the aftermath of a series of food safety incidents in 2015. What we don’t know is the chain’s ranking before those incidents.
But it’s safe to say that Chipotle would have been shocked back in 2015 if its survey results came in behind those of McDonald’s, the chain it has compared itself to in recent years as part of an effort to establish itself as a new type of fast food.
The best clue came in 2016, when Chipotle had a Reputational Quotient (RQ) score of 71, far higher than McDonald’s 65.78. That year’s survey was done in the midst of the uproar over food safety. It’s possible some customers simply hadn’t heard of the issues. Or maybe they didn’t care at the time.
They definitely cared a year later, however, when Chipotle’s score was down to 66.36. That was below McDonald’s and Burger King. While this year’s score has improved, it has improved only slightly. And it still finished last among the six restaurant companies included.
Chipotle clearly has failed to convince consumers that it is a better company today than it was two years ago.
That can help explain the chain’s sales results, and a poor recovery that has been something of a surprise. Average unit volumes plunged 23% in 2016. While sales improved in 2017, that improvement stalled in the second half of the year.
Company founder Steve Ells stepped aside as CEO, leading to the hiring of Niccol and the beginning of a management overhaul.
Getting those sales is important for Chipotle, which before the incidents generated an amazing $2.5 million in average unit volumes and more than 25% in restaurant-level profits. Those profits are down to 17%. While that’s still strong, it’s not nearly as strong as the company had established over the years.
Many people looking at Chipotle’s problems have suggested to me that the chain needs to work on its menu and on its innovation. Maybe. But these results show me that the challenge is more nuanced than that.
Chipotle had spent years on its reputation. Its unit volumes were based at least in part on consumers’ belief that it was a better fast-food company, because it cared about the environment, about small farmers, and about customers. The food safety incidents clearly damaged that reputation.
To get those sales and those profits back, Chipotle has to improve its reputation. The chain doesn’t work nearly as well if customers think it is just like other fast-food chains.
Speaking of other fast-food chains, the other notable thing in the RQ scores is the rating of McDonald’s.
As we noted above, the burger giant had a poor reputation back in 2016, the worst among any companies included in the RQ rankings. By far.
In the years since, McDonald’s score has improved considerably, above Chipotle and Burger King and not far behind chains such as Starbucks. Adding all-day breakfast—something customers demanded for years—probably had something to do with that.
But the chain has also improved various menu items and has been quietly working to improve its reputation. While customer surveys are still imperfect, the scores show that the efforts have gained some traction.
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