A dip or a fall?
Chipotle just reported a 4.8 percent decrease in fourth quarter earning, worse than the initial 3.7 decline predicted by analysts.
Chipotle is now citing avocados as a reason for their poor sales. Well, avocados and an increase in spending for television ads and other promotional materials. Chipotle said the avocados they use for their guacamole got more expensive, contributing to their fourth quarter sales decline.
Additional charge for avocado
Okay, that’s certainly a reasonable assertion. Product prices increase, it happens. But let’s not pretend like that’s the only reason for the decline. Consumers and business owners alike have known for years that avocados carry an extra price.
As a restaurant chain specializing in Mexican food, you would think Chipotle has their guac budget on lock.
It shouldn’t be news to them that avocados are expensive.
“Hello, fellow youth”
Increased food expenses are only part of the problem, though. Chipotle has spent a pretty good chunk of money on advertising and promotions since the E. coli outbreaks in 2015 in hopes of regaining their customer’s trust. But maybe people just don’t want to eat somewhere that’s acting like Snapchat will make up for poisoning customers.
So let’s look at what’s really going on: in spite of their valiant marketing efforts, many people still don’t want to eat there. Chipotle’s foray into Snapchat is fascinating from an evolution of social media marketing perspective, but has it really helped them win over customers?
Let’s not kid ourselves
While many teens and young adults remain loyal to the fast-casual chain, others (myself included) are likely put off the restaurant for life. Business Insider notes that since the outbreaks, store sales have declined for three consecutive quarters.
Although CNBC reported that Chipotle’s shares have increased four percent since announcing their fourth quarter decline, Chipotle still has quite a way to go to mend its reputation as a safe place to consume food.
