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Chipotle’s Free Burrito Plan May Be Working

Chipotle Becomes First Non-GMO US Restaurant ChainChipotle Becomes First Non-GMO US Restaurant Chain
Chipotle Mexican Grill workers fill orders for customers.Photograph by Joe Raedle — Getty Images

Chipotle Mexican Grill’s (CMG) sales have flagged in recent months after food safety scares left many customers wary, but the fast casual chain is successfully starting to win back its customers with free food.

The burrito chain has pushed a direct-mail campaign to reclaim consumers, offering perks like free chips and guacamole and burritos. A recent survey by Cowen & Co. found that 41% of respondents who received one of these coupons visited Chipotle almost three times more often than those who didn’t, reported the Wall Street Journal. The survey also found that brand perception was more positive among those who received the coupons than those who didn’t get any.

“We view couponing as the gateway to improving traffic in the near term, but do not view it as a sustainable strategy,” Cowen wrote in its note to investors.

Chipotle (CMG) reports its earnings Tuesday. Investors will be watching carefully if its recent moves could help boost earnings, which were hit hard as the chain has tried to recover from outbreaks of food-borne illnesses at many of its stores. A norovirus outbreak in Boston sickened more than 140 people, while prior to that an E. coli outbreak affected 52 people in nine states.

 

Those scares pushed Chipotle’s comparable store sales down 36.4% in January and 26% in February. At the time of the announcement in March, the beleaguered company said the sales were beginning to recover.

Chipotle founder Steve Ellis also publicly apologized for the outbreaks in full-page advertisements in national media and assured customers that the company was taking major steps to ensure food safety throughout their operations.

“The fact that anyone has become ill eating at Chipotle is completely unacceptable to me and I am deeply sorry,” he wrote.